Brazil’s real dropped the most among major currencies as the central bank stepped up efforts to weaken the currency as Brazilian assets rallied on renewed speculation that impeachment of President Dilma Rousseff is drawing closer.
The central bank announced it would auction 80,000 foreign-exchange reverse swaps Wednesday, a move that’s equivalent to buying $4 billion in the futures market, a day after selling a record $8 billion of the contracts. It sold 63,000 contracts in two different auctions on Wednesday, less than the total offered. Brazil’s currency, the most volatile in emerging markets, fell 1.4 percent to 3.5400 per dollar at 12:39 p.m. in Sao Paulo.
The central bank is intervening to cool gains in the currency as traders bet that an impeachment of Rousseff will lead to a new government that could curb a record fiscal deficit and help boost business confidence. The real was the world’s biggest gainer in the first quarter after tumbling last year as Brazil lost its coveted investment-grade status and a sweeping corruption scandal hit businesses and the government.