March 26, 2014 / 1:45 PM / in 4 years

Brazil real erases gains after partial sale of FX swaps

RIO DE JANEIRO, March 26 (Reuters) - The Brazilian real erased early gains on Wednesday after the central bank initially sold only a little more than half of the currency swaps it has been offering on a daily basis to support the exchange rate.

The partial sale of swaps - derivatives that provide hedge against currency losses - raised speculation that policymakers could become less aggressive in their currency intervention as the real climbed to four-month highs.

But shortly after the central bank’s regular swap auction, in which it sold 2,400 of the 4,000 contracts offered, the bank announced an additional auction to reoffer the remaining 1,600 contracts that were not sold.

The real last traded at 2.3107 per U.S. dollar, 0.2 percent weaker on the day, after gaining as much 0.5 percent. (Reporting by Walter Brandimarte; Editing by James Dalgleish)

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