Forex Blog: Currency Trading News & Analysis.

August 22nd 2006

Brazil attempts to depreciate currency

Brazil’s currency, the Real, is currently hovering around a five-year high against the USD, after an historic run-up in value. In recent months, the Central Bank of Brazil has begun to grow nervous that a more expensive Real could stifle Brazil’s economy by crimping exports. Accordingly, the bank has purchased massive quantities of USD in a bid to hold down the value of the Real. While the Real has certainly stabilized, such intervention is misguided and probably doomed to fail in the long run. Other Latin American countries have followed suit, since western investors began pouring in investment money. Reuters reports:

Brazil’s central bank has been aggressively buying U.S. dollars on the spot foreign exchange market in recent months to build up reserves and, indirectly, prevent the country’s currency, the real, from strengthening too much.

Read More: Brazil’s foreign reserves rise to $70 billion

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

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