Brazil's currency had its biggest gain after almost two years. This was because of the central bank's efforts to stem the world's worst currency decline. The central bank of the country announced USD60 billion intervention program that involved loans and swaps.
The Real increased by 3.7% to 2.3488 per US dollar in Sao Paulo. The decline was pared in the last three months to 13% still having to be the biggest decline among 31 major dollar counterparts. This was according to a data tracked by Bloomberg. This week, the Real was up by 1.9%, the most since February.
The threat of inflation became a greater issue after the Real again plunged to its four year low this week. This was almost at the top end of the central bank's targeted range. Investors had been exiting emerging markets after the US Federal Reserve prepared to reduce the amount of stimulus that it pumps into the world economy.
With regards to this, the central bank of Brazil created an intervention plan involving an auction. The plan was to auction USD1 billion loans every Friday effective today. It also included an equivalent of USD500 million worth of foreign currency swaps every Monday until Thursday. This was according to the bank's statement issued earlier yesterday. The program would last until December 31 this year.
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