Brazil Could Use Reserves to Damp Currency Volatility, Levy Saysby
$370 billion of foreign reserves protects the country, he says
Swaps program seen as sucessfull in offering protection
Brazil could use part of its $370 billion in international reserves to contain market volatility, according to Finance Minister Joaquim Levy.
The use of reserves "is a possibility," Levy told journalists at an event in Sao Paulo late Thursday. "Obviously, the decision on that is up to the central bank. But President Tombini has reiterated that this is a tool of security that can never be ruled out."
The country’s tender rebounded from a record low and gained the most in seven years on Thursday as central bank President Alexandre Tombini said policy makers have options to stem the rout that sent the currency plunging this year amid doubts the government can shore up the economy. Brazil has the tools needed to protect the country in moments of turbulence, Levy said.
The central bank held two different foreign-exchange swap auctions Thursday, selling 20,000 contracts in the first one and extending maturities of 9,450 contracts in the second. It announced the sale of an additional 20,000 on Friday.
Brazil’s central bank resumed new sales of swap contracts on Sept. 23. A similar program was in place from August 2013 to March 2015 amid efforts to crack down on inflation.