Brazilian Central Bank Expected to Counter Decline of Real

The Brazilian real fell today, following yesterday’s gains. The rally on the previous trading session was caused by speculations that policy makers would take measures to support the currency.
There were speculations that the Brazil’s central bank will increase its main interest rate to rein consumer inflation, but such talks eased recently. The Central Bank of Brazil left the key Selic rate unchanged in November, following 10 consecutive decreases. Brazil’s inflation is expected to accelerate to 5.47 percent next year, exceed the bank’s target.
The central bank sold $1.8 billion of currency swaps at two auctions yesterday. The bank was managing currency swaps, selling and buying them, to prevent the real from weakening or strengthening too much.
USD/BRL rose from 2.0496 to 2.0503 as of 000:52 GMT today and its daily high was at 2.0530. EUR/BRL went up from 2.7121 to 2.7132.

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