The central bank of Brazil bought dollars in the forex spot market today in order to hold down the soaring value of the real, the Brazilian currency. So far this year, the real has appreciated by 8.5 percent, placing pressure on exporters.
Economists attribute the rise of the Brazilian real to the inflow of capital. Oversees debt markets were tapped by Brazilian companies to the tune of 14 Billion USD this year. Other thriving South American economies, such as Colombia, have similarly appreciating currencies and face the same choices as Brazil regarding intervening in the currency markets.
Source: Bloomberg
