Brazil had record foreign reserves of more than $150 billion, the central bank said on Monday after buying dollars on the spot foreign exchange market for months. The local currency, the real, is near a seven-year high against the US dollar.
The central bank has tried to blunt the real's rallies by buying dollars nearly every trading session on the local foreign exchange market. In 1999, the central bank spent billions of dollars trying to defend a fixed trading level for the real, which was being pressured by a gaping current account deficit.
In the end, the central bank was forced to float the real and, left with only scant reserves, asked the International Monetary Fund for a bailout package. Reserves have risen consistently over the last several years on large surpluses in Brazil's trade and current accounts.
Credit rating agencies have said rising reserves are helping push Brazil toward obtaining investment grade ratings, which makes it cheaper for the government and companies to borrow on global capital markets.
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