Brazilian Real Falls Day After Intervention; Swap Rates Decline

Brazil’s real dropped a day after the central bank intervened to weaken the best-performing emerging-market currency this year.

The currency depreciated almost 0.1 percent to 1.9577 per U.S. dollar at 9:54 a.m. in Sao Paulo. Swap rates due in January 2014 decreased two basis points, or 0.02 percentage point, to 7.83 percent.

The real fell yesterday from a 10-month high as the central bank sold $1 billion of reverse foreign-exchange swaps. The currency has strengthened 4.8 percent in 2013, the most among 25 emerging-market counterparts tracked by Bloomberg, as inflation accelerated.

“The central bank has found a balance point for the real between 1.95 and 2 per dollar,” Jose Carlos Amado, a currency trader at Renascenca DTVM in Sao Paulo, said in a phone interview. “The government has a clear concern with inflation and depending on the flows it could let the real appreciate more, but in the short term is comfortable with this level.”

To contact the reporters on this story: Blake Schmidt in Sao Paulo at bschmidt16@bloomberg.net; Josue Leonel in Sao Paulo at jleonel@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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