UPDATE 1-Brazil currency reverses losses on central bank intervention
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SAO PAULO/BRASILIA, Feb 13 (Reuters) – Brazil’s central bank waded into currency derivatives markets on Thursday, pulling the exchange rate back from its weakest level ever, after President Jair Bolsonaro said he thought the dollar was “a little too high.”
The sale of up to 20,000 currency swap contracts brought the dollar sharply down from a peak of 4.3829 per Brazilian real , the fifth day in a row it hit a new record high, accumulating a roughly 9% rise so far this year.
Traders said the selling pressure on the real intensified early on Thursday after Economy Minister Paulo Guedes indicated the night before he was comfortable with the real’s decline.
“Interest rates are a little lower, which is good for everyone. At the same time, a slightly higher (dollar), which is good for everyone. More exports, more import substitution,” Guedes said.
When the dollar was down at 1.80 reais, exports fell but “everyone was going to Disneyland, maids were going to Disneyland,” Guedes said, adding that a benchmark interest rate at 4.25% and dollar above 4.00 reais is better than rates of 14% and dollar at 1.80 reais.
The central bank’s swap sales pushed the dollar down to 4.33 reais, about 0.7% firmer than Thursday’s close after the real had weakened around 0.6% in early trading. (Reporting by Luana Maria Benedito, Jamie McGeever, Lisandra Paraguassu, Marcela Ayres and Gabriel Ponte Editing by Brad Haynes and Steve Orlofsky)
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