BRASILIA: Brazil's real weakened nearly 2 percent on Monday, hurt by a drop in global commodities prices and heavy central bank intervention aimed at curbing gains in the currency, which recently hit eight-month highs.
Other Latin American currencies and stock markets saw light traded as holidays in Europe and Asia reduced volumes and risk appetite. Commodities prices fell 0.7 percent as Brent crude fell nearly 2 percent.
The Brazilian central bank offered $2 billion in reverse swaps earlier on Monday, the second day of government intervention. The real weakened nearly 2 percent to 3.5068 to the US dollar.
Brazil's currency has strengthened partly due to hopes of a more investor-friendly government in Brasilia ahead of the expected suspension of leftist President Dilma Rousseff during an impeachment trial.
Economists, however, warn that a stronger currency may hurt exports and delay Brazil's recovery from its worst recession in decades.
"Favorable domestic drivers would have had a significantly larger impact on the real were it not for heavy central bank intervention," Goldman Sachs Alberto Ramos and Tiago Severo wrote in a research report.
In equities markets, bank shares led the Brazilian Bovespa stock index slightly lower, a reaction to rig builder Sete Brasil Participa??es SA's move to file for protection from creditors on Friday.
Comments
Comments are closed.