With A Global Recession Looming, Brazil's Central Bank Will Openly Sell Dollars
Bank hasn't done this since 2009
Weak economic data from China and Germany (the world's second and fourth-largest economies, respectively) raised fear of global recession yesterday. Stock markets fell more than 3%, and the dollar surpassed R$ 4. To contain the rise, the Central Bank will sale US currency on the spot market—the first time since 2009.
The sale will begin next Wednesday (21) and is expected to extend for a week, with daily sales of $ 550 million and limited to $ 3.8 billion. The volume represents about 1% of reserves held by the institution, which today total $ 388 billion.
For the first time since 2007, interest on US government debt maturing in ten years was below the two-year bond yield. The so-called reversal of the yield curve usually precedes recessive periods.
Translated by Kiratiana Freelon