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Brazilian Real Falls From Three-Month High on Mantega’s Comment

Brazil’s real retreated from a three-month high after Finance Minister Guido Mantega said that the central bank may curtail its intervention in the foreign-exchange market.

The currency declined 0.3 percent to 2.1916 per U.S. dollar at 10:06 a.m. in Sao Paulo. It rallied 3.2 percent yesterday to 2.1860, the strongest closing level since June 18, as the U.S. Federal Reserve unexpectedly refrained from curbing a stimulus program that has boosted emerging markets. Swap rates on the contract due in January 2015 fell seven basis points, or 0.07 percentage point, to 10.04 percent today.

“The government showed it is satisfied with the level of the real,” Reginaldo Galhardo, the head of currency trading at Treviso Corretora de Cambio in Sao Paulo, said in a telephone interview. “Mantega says he doesn’t speak for the central bank, but he ends up doing so anyway.”

Mantega told reporters in Sao Paulo yesterday that the central bank’s intervention program is flexible and that it’s the bank’s decision to make changes. The real posted the best performance among major emerging-market currencies yesterday after the Fed refrained from reducing the $85 billion pace of monthly bond buying, saying it needs to see more signs of economic improvement.

Brazil’s currency has climbed 11 percent since Aug. 22, when the central bank announced a $60 billion program of intervention to bolster the currency and rein in inflation. The bank sold $497 million of currency swaps today.

To contact the reporters on this story: Gabrielle Coppola in Sao Paulo at gcoppola@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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