Brazilian Currency Drops as Central Bank Extends Intervention

Brazil’s real dropped for a fourth straight session as the central bank once again intervened to weaken the currency.

The real fell 0.9 percent to 3.3325 per dollar at 9:50 a.m. in Sao Paulo after the monetary authority announced it would offer 10,000 reverse swaps contracts, a move equivalent to buying $500 million in the futures market. The central bank has acted to weaken the real every day this week. Today’s decline means the real dropped behind the yen to become the world’s second-best performing currency this year.

“The central bank is trying to create a psychological floor for the market, with the real trading around 3.30 to 3.20 per dollar,” said Luis Gustavo Pereira, an strategist at Guide Investimentos in Sao Paulo. “The dollar was practically in freefall, and with these interventions the central bank is minimizing volatility and softening the fall.”

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