Pressure to devalue Brazil real to ease in 2022, cenbank official

By Marcela Ayres and Jose Gomes Neto

BRASILIA/SAO PAULO (Reuters) – Brazil central bank monetary policy director Bruno Serra said on Friday the bank expects pressures to devalue the real to ease next year and discussed forex intervention.

Serra said the bank has been intervening in the forex market since the end of September, having already sold $3.5 billion. The main reason for the real devaluation currently, according to Serra, is the risk to fiscal sustainability.

He also mentioned that over the last two years, Brazilian companies have been repaying foreign debt, and that reduced normal levels of inflows. Serra expects this movement to end next year with around $20 billion in annual inflows. That would reduce the devaluation pressure over the real.

Serra said Brazilian investors sending their savings abroad to diversify investments have also weighed on the forex market. The central bank director said Brazilians send around $600 million a month abroad to invest, and the accumulated volume has reached $12 billion.

Serra also said he expects the real to rise against the dollar over the next months as liquidity improves and investors begin to react to higher interest rate differentials after recent Brazilian interest rate hikes to fight inflation.

Separately, Brazil’s central bank said on Friday it will offer $500 million in currency swaps at an extraordinary auction on Monday, half the amount it has been offering in similar sales this week to prop up the real.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.