Forex Blog: Currency Trading News & Analysis.

October 16th 2007

Brazil Intervenes on Behalf of Real

Continuing our coverage of BRIC countries (see previous post), the Brazilian Real has climbed 20% in value this year alone, on top of gains recorded in previous years. Fearing that an expensive currency will adversely affect its economy, Brazil’s Central Bank announced its plans to intervene in forex markets on behalf of the Real. The Central Bank will buy Dollars at the spot rate, which should bring down the Real slightly.  However, the Central Bank also intervened about two months ago, with limited effect on the Real.  And it doesn’t hold that this time around will be any different.  Ultimately, there are economic forces beyond the control of the Central Bank which are propelling the Real upward.  Reuters reports:

"But I don’t think the bank is going to be able to prevent the real from strengthening further," said one analyst. "The dollar inflows into the country are too strong."

Read More: Brazil stocks, currency slip as intervenes

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

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