Reuters: US Dollar Report: UPDATE 1-Brazil has no target for currency -source

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UPDATE 1-Brazil has no target for currency -source May 25th 2012, 16:46 Fri May 25, 2012 12:46pm EDT SAO PAULO May 25 (Reuters) - Brazil's recent interventions in the foreign exchange market were aimed at limiting volatility after the real depreciated with "excessive" speed, but do not signal a government target range for the currency, a senior official told Reuters on Friday. "The strategy is to prevent movements that are too fast and could distort the economy," the official said on condition of anonymity. "On the other hand, we're also not going to draw any hard lines or do anything that over time, we cannot defend" in the event of a strong market shock, such as a deterioration of the euro zone crisis, the official said. Brazil's central bank began attempting to limit the real's losses on May 18 by selling currency swaps - which essentially increase the supply of dollars in the market. At the time, the real was rapidly depreciating, mostly because of concerns over the euro zone crisis. The real touched a three-year low of around 2.10 per dollar on Wednesday, but swap sales since then have helped push the real back through the 2-per-dollar threshold to 1.9935 by midday on Friday. The real is still about 15 percent weaker than it was on March 1, making it one of the world's worst-performing major currencies over that period. The official denied market speculation that President Dilma Rousseff's government was trying to establish a new floor that would prevent the real from depreciating beyond 2.05 or 2.10 per dollar. The official said the intervention was, instead, designed to keep the real from sliding too far, too fast - and added that flexibility in the exchange rate may prove necessary if the euro zone crisis deteriorates in coming weeks. "Nobody really knows what's going to happen with Greece, with Europe," the official said. "We're in wait-and-see mode." Brazil's currency regime is technically free-floating, although Rousseff's government has repeatedly taken steps over the past year to manage its trading level. Link this Share this Digg this Email Reprints

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