November 26, 2019 / 10:37 PM / 6 months ago

UPDATE 1-Brazil central bank ready for more FX intervention - Campos Neto

(Adds detail, quotes)

By Marcela Ayres and Jamie McGeever

BRASILIA, Nov 26 (Reuters) - Brazil’s central bank stands ready to intervene in the foreign exchange market again on Wednesday, selling dollars to fill gaps in market liquidity, just as it did on Tuesday when the real slumped to new lows, central bank President Roberto Campos Neto said.

The central bank intervened twice in the spot market to sell dollars on Tuesday as the U.S. currency surged to an all-time high near 4.28 reais, moves that eased the pressure and pushed the dollar back down to around 4.23 reais.

“Today we had a very atypical movement; the exchange rate became dislocated, with gaps in liquidity,” Campos Neto said at an event promoted by newspaper Correio Braziliense.

“If tomorrow we think there are dysfunctional moves, that Brazil’s exchange rate is behaving unlike other countries’ and there are liquidity gaps in the market, we will intervene again just like we did today,” he said.

The real’s slide to an all-time low against the dollar on Tuesday followed comments from Economy Minister Paulo Guedes on Monday, when he said he was not worried about its weakness and figures that showed the country’s current account deficit widening to 3% of gross domestic product.

Campos Neto added, however, that intervention alone cannot determine a currency’s direction.

“Intervention doesn’t reverse the long-term trend or change its natural trend, which is determined by several macroeconomic variables,” he said.

Reporting by Marcela Ayres Writing by Jamie McGeever Editing by Chris Reese and Dan Grebler

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