Brazil’s real dropped ahead of a central bank intervention to weaken the currency.
The central bank will offer up to 20,000 foreign-exchange reverse swap contracts on Wednesday, equivalent to buying dollars in the futures market. It will also reduce rollover auctions to 2,500 contracts a day from 3,600 previously. The real lost 1.6 percent to 3.6393 per dollar at 10 a.m. in Sao Paulo.
The bank’s move reverses its previous policy of using the swaps to help bolster the real. The central bank changed tactics after the real climbed 9.4 percent against the dollar this year through Friday, more than any other major currency in the world, as the drive to impeach President Dilma Rousseff gained momentum.
“Investors are getting convinced the central bank intends to tackle the exaggerated appreciation of the real, that the move in recent weeks has a limit,”said Camila Abdelmalack, the chief economist of brokerage CM Capital Markets in Sao Paulo. “The strong appreciation of the dollar is also weighing on the real and political developments in Brazil should keep the currency volatile.”
Brazil Energy Insight 
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