Brazilian Central Bank’s $34 Billion Swaps Send Real Tumbling


Brazil’s real fell the most its major peers after the central bank extended its program to weaken the currency to $34 billion. Stocks also dropped.

The real was set for its worst weekly slump in two months after the monetary authority offered $1 billion in reverse swap contracts, which have the same effect as buying the U.S. currency in the futures market. Policy makers revived the program last month after the real surged, dimming the outlook for exports. The Ibovespa retreated for a second day, led by miner Vale SA and lender Banco Bradesco SA. Brazilian markets were closed for a holiday on Thursday.

Traders had pushed up the value of Brazilian assets this year on speculation that the bid to impeach President Dilma Rousseff would usher in a more market-friendly government and ignite the approval of measures intended to pull Latin America’s largest economy from its worst recession in a century. While the appreciation of the Brazilian currency hasn’t had a meaningful impact on foreign trade as exports rose in March for a second consecutive month, the central bank has been trying to curb further gains to prevent the nation’s goods and services to lose their competitiveness abroad.

“In the absence of fresh impeachment news, the central bank is pushing the real down,” Camila Abdelmalack, the chief economist of brokerage CM Capital Markets, said from Sao Paulo.

The real slumped 1.9 percent to 3.5982 per dollar at 12:05 p.m. in Sao Paulo, the most among 31 most-traded currencies. The Ibovespa retreated 1 percent to 53,077.84.

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