Brazil central bank to ease pressure on market as real tumbles

SANTIAGO : The Brazilian central bank will monitor market conditions to decide whether to resume daily currency swap sales after the real fell sharply for a second day following U.S. President-elect Donald Trump’s victory, Governor Ilan Goldfajn said on Thursday.

“We are pausing and looking at the market conditions and we are not intending to put any pressure on the FX market,” Goldfajn told reporters on the sidelines of an event in Santiago.

Since last year the central bank has held daily auctions of reverse currency swaps, which function like dollar purchases by investors for future delivery, to reduce its costly stock of traditional swaps. It halted the auctions on Wednesday.

The surprise election of Trump to the White House has rattled emerging markets as investors fear the businessman will make good on campaign promises to limit commerce and rework trade accords.

The real fell 5 percent on Thursday, leading losses among Latin American currencies.

Brazilian Finance Minister Henrique Meirelles said the incipient recovery of the Brazilian economy could suffer if Trump steps up protectionism.

Goldfajn said he expects the economy in 2018 to grow more than the 1.2-1.3 percent the bank forecasts for 2017.

Government measures to contain public expenditures have already yielded results with inflation easing and confidence bouncing back, Goldfajn said.

He reiterated that policymakers are committed to bringing inflation back to the center of the official target in 2017 and keeping prices low and stable.