Brazil's real gained ground against the dollar on Friday in a volatile session after the central bank sold fewer currency swaps than in previous days, while stocks slipped from near-record highs.
After weakening more than 1 percent early on, the real finished 0.56 percent ahead at 2.318 to the dollar. The currency reversed course after the central bank sold just 69 percent of the currency swaps on offer in an auction.
That amounted to just $277.1 million, almost a third less than what the bank has been selling on a daily basis this week.
"After the swap auction, people started to buy reais," said Julio Cesar Vogeler, a currency trader at Didier Levy brokerage in Sao Paulo.
The central bank has been aggressively selling currency swaps and buying dollars on the spot market in recent weeks, helping to knock the real off a 4-1/2-year high and placating exporters who have complained that a strong local currency is making their products less competitive on world markets.
The so-called reverse swaps allow investors to buy exposure to Brazil's lofty benchmark interest rate of 18 percent without having to purchase reais.
They also cancel out old dollar-linked debt sold to prevent the real from weakening.
On Friday the bank also bought dollars for the 55th time since early October to build up foreign reserves.