RIO DE JANEIRO, July 1 Brazil's central bank
will kick off on Wednesday the rollover of currency swaps that
expire early in August by offering less contracts than it did
last month, a sign it wants to stop the real from gaining much
The bank said in a statement it will auction on Wednesday as
many as 7,000 currency swaps - derivatives that provide
protection against losses in the real - as part of its strategy
to renew $9.5 billion worth of swaps that expire on August 1.
Last month, it offered as many as 10,000 contracts per day
to roll over some $10.1 billion worth of swaps that expired on
July 1, renewing about 85 percent of those contracts.
If the central bank keeps the new rollover pace intact until
the end of the month, it will be able to renew about 80 percent
of the Aug. 1 maturities.
The regular sale of swaps has been part of a successful
central bank program of intervention in the foreign exchange
market, which has helped the real gain about 7 percent so
far this year.
Last week, policymakers extended the intervention program
without changes until the end of the year, causing the real to
rally past the level of 2.2 per dollar for the first time in
more than two months.
Over the past couple of months, the central bank succeeded
in stabilizing the real largely within 2.20 to 2.25 per dollar.
Many analysts believe policymakers want to keep the currency
within that range in the short term as it is considered a sweet
spot for both exporters and policymakers worried about inflation
from imported goods.
The real closed on Tuesday at 2.203 per dollar.
(Reporting by Walter Brandimarte and Bruno Federowski; Editing
by Bernard Orr)