The Brazilian real gained on Tuesday to its strongest level in more than a year and a half, following a rise in capital inflows and after the central bank resumed currency intervention following a two-week pause. The real firmed 0.45% to 3.096 real per dollar, its strongest showing since July 2015.
Brazil's currency, the Real, tumbled on Thursday after the government announced it would slash its fiscal savings goals for this year and next, raising investor fears that the country may lose its investment-grade credit rating.
Argentina’s central bank governor Alejandro Vanoli said that despite the continued erosion of the Brazilian currency against the US dollar, which ended the week trading at 3.28 Real to the greenback, monetary policy will continue to manage the foreign exchange to avoid volatility and ensure economic growth.
Twenty years ago, first July 1994, after decades of financial turmoil, Brazil introduced its current currency, the Real, marking a turning point in the country's fight against hyperinflation.
Brazil's exchange rate is at a reasonable level though not totally satisfactory said Finance Minister Guido Mantega on Friday, in an indication that the government is prepared to further weaken the Real to boost a still weak economy.
Brazil unveiled Wednesday the latest effort to stem a flood of foreign capital that is driving the local currency sky-high and undermining the competitiveness of the country’s exports. Finance Minister Guido Mantega blamed the currency woes on the Federal Reserve policy that keeps US interest rates near zero.