Note: the Real opened stronger this Friday testing the R$3.90 level for the US dollar.
Alexandre Tombini’s pledge to use all the tools he has to tame volatility in Brazil’s real provided a respite Thursday for thebeleaguered currency. Strategists at Citigroup Inc. and Standard Chartered Plc say it won’t be enough to calm markets.
The central bank president’s comments helped send the real from a record low to its biggest gain in seven years Thursday as it surged 5.8 percent. It extended gains on Friday, rising 0.5 percent to 3.9331 per dollar as of 8:40 a.m. in New York. Still, the currency’s down 8.1 percent in the past month, more than any other emerging-market currency. And investors are bracing for more pain amid doubts the government will be able to shore up its budget and lead Brazil out of what’s forecast to be its worst recession since the 1930s.
The rout in the real shows the loss of confidence in Brazil and prompted Tombini’s attempts to reassure investors at a surprise press conference, one day after the central bank said it would sell new foreign-exchange swaps to support the real for the first time in six months. Currency derivatives show investors betting on further losses as President Dilma Rousseff struggles to win support for spending cuts and tax increases her administration says are needed to avoid further credit-rating downgrades to junk.
Brazil Energy Insight 
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