Economy: Central Bank announces US$ 50 billion auction program

23 Oct 2008

The Central Bank of Brazil decided today (23rd) to implement a foreign exchange auction program (contracts that swap interest gains for oscillation of foreign currencies) of up to US$ 50 billion. According to a release of the Central Bank, the measure is part of a strategy for “mitigating the impact of the international financial crisis on the Brazilian economy.”
According to the Central Bank, sales will be carried out according to the demand for liquidity (funds available) from the markets. “The swaps, as well as foreign reserve operations [sales of dollars] and secured foreign currency loans, are effective mechanisms and will continue to be used to the extent deemed necessary by the Central Bank, so as to ensure the good functioning of markets," claims the Central Bank's release.
This decision by the Central Bank comes at a time when the United States currency is heavily appreciated. Early today (23), the dollar was worth approximately 2.50 Brazilian reals.
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