Brazil Injects Close to US$ 3 Billion in Economy to Halt Rising Dollar

100 dollar bills The Brazilian Central Bank announced on Thursday, October 16, further measures to ensure liquidity and support the real, Brazil's currency, the real. The bank expanded the list of securities it will accept to free up reserve requirements on term deposits and took new measures to ensure that banks that borrow from its discount window provide credit lines to exporters

The real closed up 0.2% at 2.16 per dollar after the central bank sold one billion in dollar repurchase agreements and sold 1.814 billion of 2.5 billion in dollar swap contracts on offer in an auction on Thursday.

The Bovespa stock market index ended trading on Thursday down 1.06% at 36,441.72 points after slumping 7%. Bovespa followed the Wall Street 4.6% rally as investors snapped up beaten-down shares following on the worst day since the 1987 stock market crash.

Shares of government managed Petrobras oil company sank 7.5% and mining company Vale do Rio Doce, which is taking a hit from a sharp decline in industrial metals prices, fell 2.1%.

Meanwhile Latin America's second largest economy. Mexico. stepped up intervention in the foreign-exchange market, helping the peso post gains, an hour after central bank Governor Guillermo Ortiz said policy makers were looking to pare back their purchases of the currency.

Banco de Mexico bought 1.9 billion US dollars worth of pesos, up from 400 million on Wednesday. The bank has now purchased 11.2 billion US dollars worth of pesos, depleting its near-record foreign reserves, since the currency tumbled to a record low last week amid the worst global credit crisis since the Great Depression.

The peso finally rose 2.4% to 12.8343 per dollar after having plunged as much as 4.2% before the central bank stepped into the market. The currency has dropped 23% since it reached a six-year high last August as the financial crisis prompted investors to pull money out of higher-yielding, developing-nation assets.

Banco de Mexico may stop using its foreign reserves to prop up the peso soon, Ortiz said in an interview on Televisa network Thursday. He said new peso purchases wouldn't be as large as last week's interventions.

The bank bought 6.4 billion US dollars worth of pesos on October 10 alone. It said on October 14 that reserves had fallen to a one-year low of 75 billion. Reserves stood at a record 86.9 billion US dollars on July 18, up 52% from three years earlier boosted by exports of oil.

Mercopress

Tags:

You May Also Like

Gabeira, a Do-gooder Brazilian Politico Among Foxes Devouring Public Chickens

Brazil’s leading news magazine, Veja, praised Congressman Fernando Gabeira as “the champion of ethics ...

Brazilian Businessmen Can’t Decide If They Want Chavez in the Mercosur

In Brazil, the National Congress controversy over the incorporation of Venezuela to the Mercosur ...

Brazil Adopts DuPont System to Protect Food Chain Against Pathogens

The Brazilian Ministry of Agriculture has selected the DuPont Qualicon RiboPrinter system, for its ...

An Exchange

Debate Goes OnBy If you prick us do we not bleed? If you tickle ...

US Counts on Paraguay to Tame Brazil and Argentina

Two soccer teams played for a spot in the semifinal of the Copa Libertadores ...

Brazilian Small Oil Equipment Companies Get a Chance to Export

Micro and small companies in Brazil linked to the oil and gas sectors, which ...

Lula or Cardoso? Who Should Get the Credit for a Better Brazil?

Ever since Brazilian president Luiz Inácio Lula da Silva took office in 2003 this ...

A biodiesel factory in Brazil

A Whole Lot Going on in Africa Courtesy of Brazil

Last December Morocco became the first Arab country in North Africa to establish a ...

Brazil and Caribbean Abolish Visas for Their Diplomats

The governments of Brazil and Granada signed two cooperation agreements this Monday, April 24, ...

Brazil Led Agrofuel Revolution Is Anything But Revolutionary

Agrofuel development has arrived on the global stage. Just this year, the number of ...