Brazil Central Bank Vows More Currency Intervention If Needed

(Bloomberg) -- Brazilian policy makers will intervene further if they need to normalize the foreign exchange market, central bank chief Roberto Campos Neto said.

The monetary authority sold dollars on the spot market twice on Tuesday as the real weakened to an all-time low following comments from Economy Minister Paulo Guedes that a weaker currency isn’t a problem.

Campos Neto said at an event in Brasilia on Tuesday evening that the foreign exchange market was “dysfunctional” when the central bank decided to intervene and stressed that the bank’s actions do not change the long-term trend of the currency. He added that Brazil is “well prepared” to face turbulence, with large foreign reserves and stressed the separation between currency and monetary policy.

Read more: Brazil Intervenes Twice to Prop Up Real After Fall to Record (1)

The real has weakened nearly 9% so far this year as the central bank lowers its benchmark interest rate to an all-time low, reducing the allure of assets denominated in local currency.

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