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Brazil Real Falls on Speculation Swaps Rollover Will Be Limited

Brazil’s real declined to a two-week low on speculation the central bank will limit the rollover of currency swaps.

The currency slid 0.4 percent to 2.1837 per U.S. dollar at 10:04 a.m. in Sao Paulo. Swap rates due January 2015 declined three basis points, or 0.03 percentage point, to 10.54 percent.

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.”

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 editors responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net; Brendan Walsh at bwalsh8@bloomberg.net

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