He Brazilian real closed the day this Thursday with a rises by 2.32% against the dollar driven by the intervention of the Banco Centralwhich injected thousands of dollars into the market to contain the crisis.
The currency reached a price of 6.30 reais per dollar and then it appreciated until closing at 6.12 reais, largely due to the role of the national monetary entity, which introduced some USD 8 billion of its reserves to satisfy the high demand.
Furthermore, on three occasions during the last week, the Central Bank organized similar dollar auctions to try to stop the depreciation of its note, and will continue with these policies as long as necessary, although will not act to protect any particular exchange rate.
Brazil has “a lot of reserves” to defend its currencystated in a press conference the president of the issuing organization, Roberto Campos Neto, who, in turn, explained that the current context should not cause unrest to people or investors since it responds to a dysfunction in the market already dividend payments by companies, and not to a deterioration of risk premiums.
“The intention is not to change the course but to organize the process, avoiding dysfunctions in currency trading”said about this financial exit – one of the largest in history, which has already amounted to more than USD 9,000 million – and added that his entity will also continue to monitor its development.
For his part, the director of the Central Bank, Gabriel Galípolo, ruled out that this scenario is about a “coordinated speculative attack” against the Brazilian currency, despite the fact that, shortly before, the Government had asked the Federal Police to investigate a series of fake news spread on social networks that, in the last three weeks, led to a increased pressure on the national currency and its devaluation of almost 9 percent.
It was detected “a direct interference in market perception (that) compromised the effectiveness of measures to contain the change“, said the General State Attorney’s Office.
However, Galípolo declared that “the idea of a coordinated speculative attack does not well represent the movement we see now.” “It is not correct to treat the market as a monolithic block”he insisted.
Another factor that contributed to a better day this Thursday was the imminent approval in the Chamber of Deputies of a package of public spending cutswhich will be addressed shortly by the Senate and generates great anxiety among investors.
The project is in “the right direction”Galípolo confided, although he acknowledged that “it is difficult to present a fiscal plan that corrects all the problems in the short term.”
The pressure on the Brazilian real intensified this Monday, when the day closed with the currency at a historic low -at 6.09 per dollar-, which reflected a depreciation that has reduced a fifth of its value so far this year and left it like one of the worst performing emerging market currencies.
In 2024, the real lost almost 20 percent, while inflation and the chronic fiscal deficit worsen.
(With information from EFE and Reuters)
