BRASILIA, March 11 (Reuters) - The Brazilian central bank is not considering reducing its currency swaps stock at the moment despite a sharp appreciation of the local currency, a senior member of the government's economic team told Reuters on Friday.
The Brazilian real has surged nearly 10 percent since the beginning of March as investors see a potential change in government as the best solution to the worst economic recession in over 30 years.
"We are not thinking about that right now," said the official, who asked for anonymity to speak freely. "We are recycling the hedge position at the moment ... We are listening to the market."
The central bank has about $110 billion in outstanding currency swaps on its books, contracts which offer protection from sharp currency devaluations. The strategy has drawn criticism from some analysts due to its high fiscal costs.
The bank has been fully rolling over the stock of currency swaps for several months. Some traders saw a decision to only sell some of the contracts offered in a daily auction on Friday as a signal it could allow some to mature in April. (Reporting by Alonso Soto, Patricia Duarte and Daniel Flynn)