Reuters: US Dollar Report: UPDATE 1-Brazil won't modify FX intervention program- central bank

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UPDATE 1-Brazil won't modify FX intervention program- central bank Sep 23rd 2013, 17:28 Mon Sep 23, 2013 1:28pm EDT * Bank chief says FX program is adequate, working well * Delayed Fed tapering has been positive for EM assets * Brazil ready to face U.S. monetary policy normalization By Alonso Soto BRASILIA, Sept 23 (Reuters) - The Brazilian central bank will keep its $60 billion currency intervention program unchanged despite a recent rally in the real supported by the U.S. Federal Reserve's decision to continue pumping dollars into the world economy. Central bank chief Alexandre Tombini said on Monday the program, which provides dollar liquidity through the sale of currency swaps and repurchase agreements, has been successful in reducing volatility in the foreign exchange market. "From our perspective the program is adequate, is working well, so there is no news whatsoever from our side on this issue," said Tombini when asked in a teleconference with reporters and analysts if the program could be adapted. Finance Minister Guido Mantega had said last week shortly after the Fed's surprise decision that Brazil could reduce the amount of resources earmarked for the daily interventions as the real gained ground. Analysts say his comments were aimed at preventing the real from strenghtening too much, which could hit local exporters. The U.S. central bank's move on Wednesday to continue its stimulus plan for now brought back investors that had fled emerging market countries on the expectation of higher interest rates in the United States. The Brazilian real strengthened about 3 percent that day alone. Before that gain the real, which had slipped to its weakest level in nearly five years in August, was the major currency that had weakened the most against the dollar in the previous six months. After the real's August slump, Brazilian policymakers launched the intervention program, which has been welcomed by many analysts on the grounds that it has provided markets with the predictability needed to halt the plunge of the real. The weaker real has eroded the country's external accounts, pushed up inflationary pressures and increased risks to local companies with large dollar debts. The real was trading 0.83 percent stronger at 2.1995 per dollar in the early afternoon. Tombini said the country was ready to face the normalization of U.S. monetary policy but stressed that a gradual withdrawal of stimulus would be most beneficial for emerging-market nations and the world economy. He said he was "cautiously optimistic" about the Brazilian economy. Link this Share this Digg this Email Reprints

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