Brazil real falls on report of possible government intervention

Brazil’s real dropped for a fourth day in the longest stretch of losses in September after a newspaper reported that the government may take steps to prevent the currency’s appreciation.

The real declined 0.2 percent to 2.0356 per U.S. dollar, extending its decline in the third quarter to 1.3 percent, the worst performance among the greenback’s 16 most-traded counterparts tracked by Bloomberg. Swap rates on contracts due in January 2014 were unchanged at 7.73 percent.

“The government is going to try its best to contain the real from a speculative attack as the expectation for flows is very positive,” Italo Abucater, the head of currency trading at Icap Brasil, said in a phone interview from Sao Paulo. “And the market abroad has been bad since yesterday.”

The real also fell against the dollar along with most other major currencies as concern global stimulus measures will fail to bolster the economy encouraged demand for a refuge.

Brazil may take action to protect the real from stimulus by central banks in the U.S., Europe and Japan, Valor Economico reported, citing an official in the government’s economic team whom it didn’t name.

Possible government measures include boosting dollar reserves and reducing the primary surplus to allow for more tax cuts, the newspaper reported. An official at the Finance Ministry said it doesn’t comment on reports based on unidentified people.

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