President of the BC stated that the monetary authority will act when there is “dysfunctionality of the currency”
The president of the BC (Central Bank), Roberto Campos Neto, said that the additional auction of 20,000 foreign exchange swap contracts has no relation to the level of the dollar. According to him, the exchange rate is floating and the action was taken to correct distortions in the market.
On Tuesday (April 2, 2024), the monetary authority interfered for the first time in the exchange rate under the current administration of President Luiz Inácio Lula da Silva (PT). The day before, the commercial dollar had closed at R$5.06. This Wednesday (April 3, 2024), the North American currency operates up 0.38%, at R$ 5.08, at 11:43 am.
Campos Neto participated this Wednesday (April 3, 2024) in the Bradesco BBI Brazil Investment Forum event. Here is the full presentation (PDF – 3 MB).
“Our intervention had nothing to do with the exchange rate movement. We always say that the exchange rate is floating. It is important for the exchange rate to be floating, because it works with an element that absorbs shocks and redistributes resources more efficiently”he declared.
The BC president stated that the monetary authority will intervene when there is “currency dysfunctionalities”.“We have a reserve situation compared to other countries in Latin America and other countries in the emerging world”he declared.
In the specific case of Tuesday (April 2, 2024), the dysfunctionality would be the “demand for foreign exchange instruments resulting from the effects of the redemption of NTN-A3”which is a National Treasury bond, on April 15 of this year.
