Analyst weighs in on Brazil’s FX intervention

StoneX analyst weighs in on Brazil’s first FX intervention in nearly two years

Leonel Mattos, Market Intelligence Analyst at StoneX, was recently quoted in a Reuters article weighing in on the motives of the recent Brazil central bank intervention in the foreign exchange markets. After the real’s value decreased against the dollar, the monetary authority announced an extra swap auction on Monday, which amounted to 20,000 additional contracts worth $1 billion. 

This is the first time that the nation’s central bank intervened in the currency markets in almost two years, causing market participants to speculate on the monetary authority’s motives. While some analysts believed that the intervention was unrelated to the rise of the dollar against the real, Leonel Mattos had a different view.

Mattos pointed out that the central bank could have intervened on any day between April 2 and April 15, but the announcement coincided with the Brazilian real weakening significantly against the dollar. In fact, the currency was at its lowest since October 2023 at the close of the April 1st’s trading session.

"The fact is that the recent depreciation of the real must be worrying the central bank, which is actually seeking to contain a more significant upward movement (of the dollar) and reduce exchange rate volatility."

Disclaimer: The analyst's opinion does not reflect the opinion of StoneX Group Inc.

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