By Brian Asher
RIO DE JANEIRO--The Brazilian real strengthened in midday trading
Wednesday as investors awaited an announcement from the U.S. Federal
reserve regarding U.S. monetary policy.
The real was trading at BRL2.0380 to the dollar as of 1620 GMT
according to Tullett Prebon via FactSet, stronger than Tuesday's close
at BRL2.0447 to the dollar.
The real has traded in a narrow band between BRL2.00 and BRL2.10 to
the dollar in recent weeks, as the Brazilian government has made it
clear it intends to maintain the currency in a tight range. Excessive
currency depreciation stokes domestic inflation, while appreciation
hurts the competitiveness of Brazilian exports.
The real strengthened Wednesday despite the expiration of roughly $4.5
billion dollars worth of dollar-swap contracts that the central bank
had issued earlier in the year to strengthen the real at times when it
was depreciating sharply against the dollar.
Investors may be anticipating an announcement from the U.S. Federal
Reserve of increased monetary stimulus in the world's largest economy,
a move that would boost the real and other major currencies against
the dollar.
The European Central Bank will also meet Thursday as European
officials desperately search for answers to the deteriorating
situation in euro-zone economies. Any new measures to combat the
crisis and preserve the euro would cause a rally in emerging-market
currencies such as the real.
Write to Brian Asher at brian.asher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 01, 2012 12:41 ET (16:41 GMT)
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