Brazil’s real declined to a two-week low on speculation the central bank will limit the rollover of currency swaps.
The central bank announced yesterday it will auction as much as $1 billion of foreign-exchange swaps today, according to an e-mailed statement. It didn’t say whether it will roll over the remaining $7.9 billion in swaps that also mature Nov. 1 in potential auctions tomorrow and Oct. 24.
“The smaller size of the rollover signals the central bank’s intention of not letting the dollar rise much beyond the current level,” Paulo Petrassi, managing partner at Leme Investimentos, said in a phone interview from Florianopolis, Brazil. “The central bank needs to look at both ends due to it’s need to control inflation, and on the other hand, it’s need to improve the trade balance.”