Brazil launches $60bn currency programme
August 23, 2013, 7:10 am

Brazilian President Dilma Rousseff had earlier on August 21 held an emergency meet with close aides Finance Minister Guido Mantega (left) and Central Bank chief Alexandre Tombini [Xinhua]

The new currency-intervention programme was announced on Thursday and will take effect from Friday.

According to statement from the central bank, there will be an auction of $1 billion of dollar loans every Friday and an offering of the equivalent of $500 million worth of foreign-exchange swaps a day on Mondays, Tuesdays, Wednesdays and Thursdays.

The real fell 9.1 per cent against the US dollar in July.

Brazilian President Dilma Rousseff had earlier on the August 21 held an emergency meet with close aides Finance Minister Guido Mantega and Central Bank chief Alexandre Tombini.

Mantega, in an interview with local daily O Globo, said the government will reduce its growth expectations to 2.5 per cent this year.

Brazil’s development bank BNDES chief Luciano Coutinho said earlier on Thursday that a “sustainable” exchange rate for the country would be between 2.2 and 2.35 Reais to the US dollar, which is currently trading at around 2.44.

Currencies in emerging markets around the world have taken a hit on indications from the US Federal Reserve that it might end the $85 billion-a-month stimulus programme soon.

Coutinho said he believes Brazil’s $370 billion foreign reserves will hold the economy in good stead.

“I believe at some point the currency will stabilize. There is some overshooting in the exchange rate, but we need to keep calm because we have good fundamentals,” Coutinho said.

The BNDES has also announced plans to finance infrastructure projects worth $12.34 billion in 2013, a rise of 22.5 per cent since last year.

Source: Agencies