Brazilian Real Weakens as Central Bank Steps In, Shares Fall
April 22 2016 - 5:50PM
Dow Jones News
By Jeffrey T. Lewis
SAO PAULO--The Brazilian real weakened against the dollar Friday
as the central bank stepped in and sold swap contracts that support
the U.S. currency, and shares fell.
The Ibovespa stocks index fell 1.4% to 52908 points. The real
exited active trading at 3.5732 to the dollar, according to Tullett
Prebon via FactSet, after closing at 3.5319 on Wednesday. Thursday
was a holiday in Brazil and financial markets were closed.
Brazil's central bank has been auctioning reverse currency swap
contracts for weeks, with the intention of weakening the real, or
at least slowing its gains against the dollar, according to
traders. The bank wants to keep the real between 3.50 and 3.70 to
the dollar, they say. On Friday the bank sold almost $1 billion
worth of the contracts.
Efforts to remove Brazilian President Dilma Rousseff have
progressed since early February, with the lower house of the
country's Congress voting last Sunday to send the process to the
Senate for trial. Investors would prefer to see the president
ousted, so any step forward in the process tends to boost the real
and shares.
Senate leaders said earlier this week that the upper house will
vote by May 17 on whether to try Ms. Rousseff. If the Senate votes
to accept the process, Ms. Rousseff will have to step aside for up
to 180 days while the trial takes place.
Iron mining company Vale SA had the biggest decline in the
Ibovespa on Friday, with its preferred shares dropping 8.2% to
15.31 reais.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com
(END) Dow Jones Newswires
April 22, 2016 17:35 ET (21:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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