Forex Blog: Currency Trading News & Analysis.

October 4th 2005

Central Bank of Brazil may intervene

The Brazilian Real has climbed 25% against the USD in the last 12 months, thanks to soaring commodity prices and a booming economy. In order to prevent an expensive currency from hurting the export sector, Brazil’s Central Bank has announced that it will begin to buy USD, by auctioning off artificially cheap Reais. While this type of direct intervention should theoretically prevent the currency from appreciating further, analysts believe the Real’s momentum is sustainable, and the intervention will not have a significant impact. Bloomberg News reports:

“The central bank’s intervention may force a correction in prices, but it won’t reverse the main trend in the currency markets, which is for a stronger real.”

Read More: Brazil’s Currency Falls After Bank Sells Reais for Dollars

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Posted by Adam Kritzer | in Central Banks, Exotic Currencies | No Comments »

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