Currency Emergency: Brazil announces rescue plan

SAO PAULO: Markets and analysts cheered Friday after Brazil’s central bank pledged $55 billion until year’s end to prop up the sagging Real while Latin America’s biggest economy is showing weak growth. The Brazilian currency, which has been at its lowest level against the dollar in four years, closed at 2.35 to the greenback Friday, up 3.2% from Thursday’s close. Wednesday, the Real sank to 2.45 to the dollar, its lowest level since December 2008 amid the international financial crisis. Friday’s rise followed the announcement by the bank overnight that it would conduct daily sales of currency swaps and derivative contracts to boost the domestic currency and regain the confidence of markets. Brazil, along with Russia, India and Turkey, is one of the main victims of a retreat by investors from major emerging economies in recent days. Keen to capitalize on a stronger dollar, investors are massively pulling out of emerging markets seen as showing structural weakness.

Published in The Express Tribune, August 25^th 2013.

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