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After two consecutive auctions totaling more than US$4,8 billion, the Central Bank announced today, December 16, a massive intervention of US$3 billion to support the dollar, which has already surpassed R$6 in recent weeks.
The Central Bank (BC) has made a crucial decision to contain the dollar's surge: it will auction up to US$16 billion of its international reserves today, December 2024, 3. But do you know why this is so important? We will explain how this strategy impacts the exchange rate and the pockets of all Brazilians.
With the constant rise of the US currency, which last Friday (13) hit R$6,07, the BC seeks to prevent the dollar from keep this upward trajectory. The action is part of an ongoing effort to bring stability to the country's financial market and economy.
Why is the Central Bank auctioning dollars?
When the dollar rises, the impact is felt directly in everyday life: imported products become more expensive, international travel weighs more heavily on the budget and even fuel prices can rise. To avoid further pressure on inflation, the Central Bank intervenes in the foreign exchange market.
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Auctioning dollars is one of the BC's main tools. By increasing the supply of dollars on the market, the goal is to reduce the foreign currency's price, bringing more balance to the exchange rate. This is the third consecutive time that the BC has used this strategy. showing that the moment demands firm measures.
How does the Central Bank dollar auction work?
Today's auction will be held in a modality called a "line auction", with a repurchase agreement. This means that the Central Bank sells the dollars now, but agrees to repurchase these amounts in the future — in this case, in March 2025. It is like a temporary loan of dollars, which allows the flow of currency in the market to be regulated without depleting international reserves.
Last Friday (13), the BC adopted a different strategy: it sold US$845 million in cash, without repurchasing. This type of operation is less frequent, but was used for direct intervention in the market in view of the urgency to hold the dollar.
Intervention history
In recent days, the Central Bank (BC) has stepped up its actions in the foreign exchange market. On Thursday (12), US$ 4 billion were sold with a repurchase agreement, while on Friday (13), the intervention totaled US$ 845 million in cash. Despite this, the dollar ended the week higher, showing that the pressure on the exchange rate continues.
These measures are part of a larger strategy to prevent the dollar from consistently exceeding the R$6,00 barrier. The sale of US$3 billion today is an attempt to bring greater stability to the market and reduce exchange rate volatility.
What to expect from the dollar after today's auction?
Experts believe that today's auction may temporarily ease pressure on the exchange rate, but it does not guarantee a significant drop in the value of the dollar. The American currency is being impacted by external factors, such as the monetary policy of the United States, and internal factors, such as economic uncertainty in Brazil.
If the Central Bank does not continue to intervene, the dollar could rise again, increasing costs for consumers and companies. Therefore, the market should continue to pay close attention to the Central Bank's next moves and possible changes in exchange rate policy.
Central Bank actions are fundamental to protecting the Brazilian economy of more serious impacts caused by the rise of the dollar. The US$ 3 billion auction shows that the institution is committed to maintaining exchange rate stability, even in the face of a challenging scenario.
