Brazil's central bank will extend its currency intervention program into 2015 and may increase the rollover pace of expiring currency swaps to curb volatility in the real, a person on President Dilma Rousseff's economic team said on Friday. The person told Reuters that the current intervention program, which includes the sale of as many as 4,000 currency swaps per day to support the real, will not suffer changes this year.
The real on Friday closed 1.6 percent weaker at 2.3349 per dollar, its weakest level in nearly 10 months, as anxiety about the country's October presidential election added to an environment of rising risk aversion fuelled by fears of higher US interest rates. The currency slid more than 2 percent during the session after an opinion survey by pollster Ibope confirmed President Dilma Rousseff and environmentalist Marina Silva were neck-and-neck in a vote expected to go to a second round on October 26.
While many investors strongly dislike the current government and regard Silva as their best choice for change, remarks by a senior Silva economic adviser contributed to the currency's weakness. In an interview with Reuters, Alexandre Rands, an economist who helped draft Silva's economic plan, said her government would eliminate several economic distortions that have dragged the once-booming Brazilian economy into recession, including the central bank's currency intervention program. Without that program, analysts say the real would be much weaker than it is now, adding to inflation that is already at the ceiling of the official government target range.
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