UPDATE 2-Brazil has few options to limit real's surge, official says
(Adds market movement and analyst comment, paragraphs 5, 12-14)
By Alonso Soto
BRASILIA Aug 15 (Reuters) - There is not much the Brazilian government can do to halt an appreciation in its real currency that is set to continue, given high liquidity abroad and less political uncertainty at home, a senior member of the economic team told Reuters.
The government will rely on reducing its traditional currency swaps position to limit the pace of appreciation of the real, which has hit local producers already struggling with a recession, said the official, who asked not to be named because he was not allowed to speak publicly.
He said the economic team was not considering direct U.S. dollar purchases or barriers to capital flows that, in the past, had proved harmful.
"There is not much that can be done and past experience shows that other types of intervention are not sustainable and end up being harmful," said the official, who is involved in economic policy decisions but is not a member of the central bank.
After the report was published, the real extended gains to a session high of 3.1556 per dollar on Monday morning.
The real, now the world's best-performing currency, has gained a quarter of its value this year to trade at near 3 per U.S. dollar, raising pressure on interim President Michel Temer to act and shield a still-nascent economic recovery.
Temer, who will be confirmed in the post if the Senate, as expected, impeaches President Dilma Rousseff in late August for allegedly breaking fiscal rules, voiced concerns over the stronger real and promised to "look for an equilibrium." Continuación...