The Brazilian real saw its recent losses to the U.S. dollar reverse slightly on Friday as the country's central bank continued to take action to support its currency, according to Bloomberg.
The Brazilian central bank has auctioned off thousands of currency swaps over the past four days as the real hit its lowest point in three years on Wednesday. The bank only managed to sell 14,000 of the 40,000 swaps contracts, but the auctions had the desired effect of helping to support the real's value, if only slightly.
"The central bank is offering more swaps than the market is absorbing," Darwin Dib, chief economist at CM Capital Markets Asset Management, told Bloomberg. "If investors aren’t buying all the swaps offered in the auction, it’s because they aren’t very convinced that this level of the real is sustainable."
The real has lost more against the dollar than any of the top-traded currencies in the world, falling 6.6 percent even after gains early Friday brought it above two real per dollar.
The Wall Street Journal reports that the country has suffered significantly from market uncertainty surrounding the ongoing Greek debt crisis.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
