Brazil’s Central Bank to sell $7.5 bi of reserves in December
Since August, a total of $34.4 bi has been auctioned
Published in 29/11/2019 - 13:34 By Wellton Máximo - Brasília
After auctioning off $34.4 billion of its international reserves in the last few months, the Brazilian Central Bank (BC) will sell another $7.5 billion in the cash market in December. The announcement was made Thursday (Nov. 28) after the markets were closed.
Having no impact on the exchange rate, the auctions are not linked to the interventions carried out by the Central Bank this week to curb the dollar in Brazil. The direct sale of dollars from the reserves represents a new model of exchange intervention with a reflection on the fiscal policy, reducing the public debt interest and helping keep government indebtedness under control when the dollar is expensive.
The money will be used to renew traditional swap contracts due in February. One of the main tools used by the government to protect the economy from foreign impacts, the international reserves currently total $370.1 billion. Late in August, when the government adopted the new policy, reserves added up to $388 billion.
Ordinary buyers will not be allowed to acquire dollars from international reserves. This kind of transaction is restricted to dealers such as major banks and authorized brokers and aims to meet the demand for dollars of corporations and other financial institutions.
Translation: Fabrício Ferreira - Edition: Nádia Franco / Augusto Queiroz
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