BLBG:Brazil Real Snaps Declines as Short-Dollar Requirements Eased
Brazil’s real snapped three days of declines after the central bank eased reserve requirements on bets against the dollar, boosting the local currency.
Banks will be required starting Dec. 20 to deposit in cash at the central bank 60 percent of their short positions in U.S. dollars above $3 billion, compared with the previous $1 billion. A short is a bet an asset will lose value.
The real was little changed at 2.0998 U.S. per dollar at 9:41 a.m. in Sao Paulo. Swap rates on contracts due in July 2014 increased three basis points, or 0.03 percentage point, to 7.28 percent.
“If the central bank is flexibilizing those rules, it’s because it wants a stronger real,” Reginaldo Siaca, currency manager at Advanced Corretora de Cambio in Sao Paulo, said in a phone interview. “The central bank wants the market to cede a bit so the exchange rate doesn’t affect inflation.”
The central bank said yesterday it plans to sell as much as $1.5 billion in three auctions of credit lines in dollars today to boost liquidity as trading slumps at year-end.
To contact the reporters on this story: Blake Schmidt in Sao Paulo at bschmidt16@bloomberg.net; Josue Leonel in Sao Paulo at jleonel@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
