Brazil's local currency slipped from a four-year high on Friday because of expiring options. The real weakened 0.77 percent to 2.23 a US dollar, leaving gains for September at 5.4 percent, the most for any month in more than two years.
The average trading price Friday will be used as the settlement rate for currency options expiring at Brazil's Commodities & Futures Exchange so currency traders sought to set a favourable rate for the real on Friday.
The local currency has rallied in the last week to its strongest levels since May 2001 on heavy dollar inflows from exports and overseas bond sales, along with a high benchmark interest rate of 19.5 percent that has lured foreign investors to Brazil.
"In the short-term, if the central bank doesn't enter (the market), the real could go to 2.20 or 2.10," said Alex Agostini, economist at Global Invest.
The real's rallies have boosted expectations the central bank may resume buying dollars on the spot market to rebuild foreign reserves and, as a result, weaken the real to keep exports competitive. The last time the central bank bought dollars was in March and on Thursday it warned it could return "at any moment."
"We're always expecting an intervention by the central bank," said Miriam Tavares, head of currencies at the AGK brokerage in Sao Paulo. "But, in my opinion, the tendency for the real to strengthen should slow down a bit."
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