* Decision changes reserve requirement rule issued in July
* Move aims to give liquidity to FX market, support real
* Brazilian real advances a 0.4 percent
By Guillermo Parra-Bernal and Natalia Cacioli
SAO PAULO, Dec 18 Brazil's central bank on
Tuesday made it easier for banks to bet against the U.S. dollar,
in an attempt to provide liquidity to the foreign exchange
market and support the real.
The central bank said it was tripling to $3 billion the
limit for local financial institutions to short-sell the U.S.
According to the new rule, which takes effect Dec. 20, banks
have to park at the central bank 60 percent of short dollar
positions that exceed that limit. The deposits should be in cash
and will receive no interest rate.
In July, when policymakers were struggling to keep the real
weaker than 2.0 per dollar, the central bank imposed a $1
billion threshold for short dollar positions, applying the 60
percent reserve requirement to larger positions.
The central bank also changed the period of calculation of
such requirements to the average of five business days, longer
than the prior one day calculation.
The real gained slightly after the measure and
after the central bank conducted three auctions to sell as much
as $1.5 billion repurchase agreements -- another attempt to
provide liquidity to currency market at the end of the year.
It last traded at 2.0867 per dollar, 0.4 percent stronger on
the day. Traders said substantial year-end dollar outflows kept
a lid on the currency's gains.
"This is to anchor the dollar and prevent any further gains
relative to the real," said a São Paulo-based currency trader.
"This measure opens room for them to sell the greenback."
Central bank policymakers also eliminated a rule urging
financial institutions to set aside reserve requirements on
their foreign exchange short positions topping their reference