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. 

Brazil to sell dollars outright for first time since 2009. (Foto: Marcello Casal Jr./ABr)

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

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