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CORRECTED - UPDATE 1-Brazil clamps down on forex short-selling

(Corrects paragraph 2 to show that measure applies to short positions in excess of $3 billion)

* Reserve requirement imposed on dollar short positions

* Aimed at curbing increase in short forex holdings (Adds details, background)

BRASILIA, Jan 6 (Reuters) - Brazil will impose a reserve requirement on banks’ short positions on U.S. dollars in a bid to curb speculative trade that has been pushing the local currency higher in recent months, the central bank said on Thursday.

In three months’ time, local banks will have to make sure their total short positions in U.S. dollars are either below $3 billion or the value of their own core capital. The central bank will require banks to lock up the equivalent of 60 percent of any further bets against the dollar.

Banks’ short positions on U.S. dollars, a bet that the real will strengthen versus the dollar, have surged in recent months to $16.8 billion at the end of December.

Brazil is one of a number of major emerging economies battling the impact of a flood of cheap cash due to ultra-low Western interest rates. The speculative flow has driven up their currencies and prompted fears it could weaken exports and competitiveness.

Finance Minister Guido Mantega said on Tuesday that Brazil’s new government would address the damage caused by the strong real currency by enacting tax breaks and new trade protections, rather than attempting to artificially weaken the exchange rate.

The real BRBY gained 4.6 percent in 2010 and has surged by just over 14 percent since hitting a low in May of last year.

Reporting by Isabel Versiani and Ana Nicolaci da Costa; writing by Elzio Barreto; editing by Patrick Graham

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