Brazil’s real rose the most in three weeks on bets the central bank will keep supporting the currency through an intervention program.
The real gained 0.5 percent to 2.2655 per dollar at 9:37 a.m. in Sao Paulo. Swap rates, a gauge of expectations for interest-rate moves, dropped two basis points, or 0.02 percentage point, to 11.55 percent on contracts maturing in January 2017.
Brazil’s central bank sees no limit to the amount of contracts offered in daily auctions to support the real, newspaper Valor reported today, without saying how it got the information. The monetary authority started on Aug. 11 to extend the maturity of 10,000 currency swap contracts, up from 8,000 available in prior auctions.
“The central bank has been signaling it will keep intervening in the market to avoid volatility, and it seems too be willing to use all the weapons it has,” Andre Perfeito, the chief economist at Gradual Investimentos in Sao Paulo, said in a telephone interview.
The real also strengthened against the dollar after a report showed U.S. retail sales were little changed in July on tepid wage growth, a sign the economic recovery is failing to gain traction.