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Brazil Central Bank Offers to Sell $3 Billion as Real Weakens

Traffic outside the Central Bank of Brazil headquarters in Brasilia, Brazil, on Monday, June 17, 2024. In Brazil, the central bank on Wednesday may well draw the line under its 325 basis-point easing cycle and keep the benchmark Selic at 10.5% amid unmoored inflation expectations and mounting government spending concerns. (Gustavo Minas/Bloomberg)

(Bloomberg) -- Brazil’s central bank stepped into markets again to prop up the real amid a rout sparked by concerns about the sustainability of the country’s debt. 

The bank announced it will auction up to $3 billion on the spot market on Dec. 26. The real weakened 1.7% on Monday, leading losses among emerging-market currencies

The monetary authority has stepped in almost every day for the past week either with spot sales of credit-line auctions to try to meet a surge in demand for US dollars. They’ve spent about $17 billion in spot sales so far. 

Investors are dumping Brazilian assets as doubts increase around President Luiz Inacio Lula da Silva’s ability to shore up public accounts. Congress watered down a proposal to cut 70 billion in public spending, which many analysts already viewed as significantly less effective than promised. 

Companies with better-than-expected results are also driving up demand for greenbacks just as consumers also send dollars abroad even if in small quantities, central bank governor Roberto Campos Neto said during a presser last week. It’s an “atypical” movement, he added.  

©2024 Bloomberg L.P.