2012.05.25 15:55:15 Brazil's Central Bank Sells $698 Mln In Dollar Swap Contracts

SAO PAULO (Dow Jones)--Brazil's central bank on Friday sold the equivalent of $698 million in foreign-exchange swap contracts at an auction as it sought to contain weakness in the real. Of a total 40,000 contracts on offer, the central bank sold 9,000 dollar swaps maturing July 2 and 5,000 dollar swaps due Aug. 1. Friday marks the fourth consecutive day of dollar swap auctions, which allow investors to exchange paper linked to domestic interest rates for contracts indexed to the U.S. dollar. The auctions are a tool to smooth volatility in the exchange market at times when the Brazilian real is weakening sharply against the dollar. The real strengthened following the central bank's announcement of the auction, extending early morning gains. The real traded at 2.03 to the dollar Friday morning, according to Tullett Prebon via FactSet. --By Paulo Winterstein, Dow Jones Newswires; 55-11-3544-7073; paulo.winterstein@dowjones.com (END) Dow Jones Newswires May 25, 2012 09:55 ET (13:55 GMT)