Real Rises as Central Bank Starts Policy Meeting, Sheds Gains

The Brazilian real weakened today on concerns that the US Federal Reserve will continue reducing the size of its asset purchases. Earlier, the currency advanced as the Brazilian central bank started a two-day policy meeting.
The last week’s report showed that annual inflation accelerated to 5.91 percent from previous year’s 5.84 percent even though Alexandre Tombini, the Governor of the Central Bank of Brazil, promised that would not increase further. As a result, economists expect that Tombini will raise interest rates at the current meeting. Yet worries about possible stimulus reduction from the US Fed did not allow the real to profit from positive domestic fundamentals.
USD/BRL was up from 2.3515 to 2.3572 as of 16:54 GMT today, while the daily low was at 2.3470.

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