Brazil Loses US$ 28 Billion Trying to Prop Up the Dollar

Brazil's currency, the real The Brazilian central bank posted a loss of 47.5 billion reais (28.5 billion US dollars) in 2007, triple the amount in the prior year, because of Brazil's efforts to slow the strong real's appreciation against the US dollar.

The net loss reached 17.2 billion reais in the second half of last year, including a loss of 26.4 billion from transactions in the foreign exchange and swap markets, the bank said in a statement on its Web site.

For all of 2007, the bank lost 55.6 billion reais in foreign exchange and swap transactions, and 15.6 billion on interest rate payments on debt.

"Currency swaps and the inclusion in the bank's assets of resources that compose Brazil's international reserves generated a negative result because of the real's appreciation," the central bank said in its earnings statement.

The real rose 20% against the US dollar last year, its fifth consecutive annual increase. It has gained 27% over the past 12 months.

Brazil's central bank has bought dollars almost every day in the currency market to slow the real's rally and to boost international reserves. Reserves reached 190.5 billion this month according to central bank data.

The bank has also been selling reverse currency swaps monthly to give investors a hedge against a weaker dollar. In those contracts, the yield is the difference between the exchange rate variation and the accumulated benchmark interest rate during the contract term.

Mercopress

Tags:

You May Also Like

Russia Ends Embargo on Brazilian Meat

Russia suspended today its embargo on beef and pork imports from six Brazilian states: ...

Brazil: Lula Should Know He’s Not a Czar

The government of Brazil erred in speaking against the report in The New York ...

Very Un-Brazilian

I have heard Brazilians comment that people in other countries, US and Europe specifically, ...

Nightmare in Rio

In his maiden trip to Brazil this tourist, in an eventful week, was menaced ...

LETTERS

Increased liberalization of economic policy in Brazil is creating new threats and opportunities for ...

Russian-made Sukhoi (SU-30) fighter jet

Russia’s Weapon Peddling in Brazil and LatAm Is a Thriving Business

In recent years, the Russian Federation has become one of the major weapon suppliers ...

Haiti Is Giving Brazil a Chance to Prove Its Mettle Beyond Cheap Talk

After a promising beginning that included, among other accomplishments, being the second country in ...

Brazil Will Back Hamas As Long As It Recognizes Israel

The Brazilian government says it will collaborate with any Palestinian government that wants peace ...

Brazilian Company Wins Contract to Build US$ 4.6 Billion in Rigs for Petrobras

Petrobras, Brazil’s state-controlled oil and gas multinational announced that local shipyard Estaleiro Atlântico Sul ...

Chico Mendes

Named after Marechal Rondon, a soldier who tamed the Amazon, Rondônia was created in ...