Brazil’s Central Bank Says It May Partially Unwind Swaps Program

Brazil’s central bank said it sees room to partially unwind a program aimed at boosting the real, prompting the currency to pare gains.

Policy makers see the international economic environment creating an opportunity to unwind part of its foreign exchange swaps program by reducing its daily rollovers, the central bank press office told reporters on Thursday by telephone.

The central bank has used the sale of foreign exchange swap contracts, which are equivalent to selling dollars in the futures market, as a hedging instrument for local investors and companies against a sharp devaluation of Brazil’s currency. Even as Brazil’s economy faces shrinking activity and above-target inflation, the real has surged the most this year among a list of 31 major currencies tracked by Bloomberg on speculation that President Dilma Rousseff may be impeached.

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