Brazilian real falls thanks to government intervention

The Brazilian central bank intervened five times yesterday to keep the value of its national currency under control, with the Real finally seeing an 0.2% fall from three-year highs.

The currency is appreciating at the fastest rate of all the emerging markets, having grown 42% in three years, according to Bloomberg. Wednesday saw the Real hit its highest levels since August 2008, prompting government intervention to keep it under control.

The Brazilian central bank bought dollars three times yesterday, and also auctioned reverse currency swaps to bring the value of the Real down to 1.63 per dollar by close of business yesterday. Economists say given the country's extreme desirability as an investment destination, it is proving difficult to control the rate of appreciation. "There's a clash between the central bank and the market", said Francisco Carvalho at locally based currency brokers BGC Liquidez.

Source: Merco Press