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Brazil Central Bank Adjusts FX Strategy to Cut Down Swaps Pile
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Brazil's central bank has become more and more active in the currency market over the last few months, using different tools to intervene in what analysts say is a push to ultimately make the real more attractive and cut down on arbitrage trades.
Policymakers sold $1 billion in a spot dollar auction Wednesday, pairing it with a so-called reverse swap sale — the equivalent of purchasing greenbacks in the futures market — of the same size. With the combo, the central bank will sell physical dollars and unwind part of its position in FX swaps, through which it holds a short dollar position of $103 billion.
