Loading…
Brazil's central bank said it would keep intervening in the foreign exchange market in whatever size is needed to keep trading orderly. Its $3 billion spot auction on Monday tripled the size announced the previous Friday and followed nearly $10 billion in dollar swap auctions in recent weeks.
The move followed a collapse in oil prices that drove sharp volatility across world markets.
A central bank commitment to unlimited intervention caps further real weakness, which lowers the dollar-denominated cost of Brazilian export commodities. The oil price shock is also a global demand and risk-sentiment factor for commodity prices.
financialpost.comReutersMar 9, 2020After 213 past bearish macro events, Brazilian Real (BRL per USD) moved a median -0.2% over 5 sessions (46% higher; middle half -1.5% to +0.9%), and +0.2% over 20.
After 565 past bearish macro events, Crude Oil (WTI) moved a median -1.4% over 5 sessions (41% higher; middle half -5.9% to +3.0%), and -0.5% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
The central bank's pledge to keep intervening, after the oil price collapse and nearly $10 billion in swap auctions in recent weeks, reflects the FX stress and sentiment driving the 5-day real depreciation.
