UPDATE 1-Brazil's central bank reduces support for the real
(Adds detail on rollover pace of currency swaps, background)
By Walter Brandimarte
SAO PAULO, June 10 (Reuters) - Brazil's central bank decided on Wednesday to reduce the rollover pace of currency swaps that mature early next month, a move that is likely to weigh on the Brazilian real.
The bank said in a statement it will auction on Thursday as many as 6,300 currency swaps to roll over similar contracts that mature on July 1. Since the beginning of the month, the central bank had been offering as many as 7,000 contracts per day.
Currency swaps are derivatives that support the real by providing investors with protection against currency losses. The Brazilian currency closed Wednesday at 3.1140 per dollar, 0.5 percent weaker from Tuesday.
After ending in March its forex intervention program, which consisted of selling a daily amount of currency swaps, the central bank has been gradually removing its support for the currency.
If the central bank continues to sell 6,300 contracts per day until the end of June, it will roll over about 74 percent of the $8.7 billion worth of swaps that mature on July 1.
Since the beginning of May, the bank had been renewing about 80 percent of expiring swaps.
(Additional reporting by Flavia Bohone; Editing by Diane Craft and Tom Brown)
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