Brazilian Real’s Decline Prompts Intervention After Bond Tax Cut

Brazil’s real approached a four-year low, prompting the central bank to intervene in the currency market after the government’s removal of a 6 percent tax on foreign investors failed to produce a sustained rally.

The currency fell 0.3 percent to 2.1312 per U.S. dollar at 4:52 p.m. in Sao Paulo after swinging between a 1.9 percent gain and a 1.1 percent decline. The real touched 2.1492, compared with the four-year intraday low of 2.1495 on May 31. Swap rates on the contract maturing in January 2015 rose 13 basis points, or 0.13 percentage point, to 9.10 percent, a one-year high. The yield on Brazil’s local fixed-rate debt due in 2023 dropped 10 basis points to 10.35 percent.