November 18, 2019 / 8:47 PM / 20 days ago

UPDATE 1-Brazil's real posts lowest ever close of 4.2061 per dollar

(Adds comment, background)

By Jamie McGeever

BRASILIA, Nov 18 (Reuters) - Brazil’s real posted its lowest ever close of 4.2061 per dollar on Monday, as heavy selling met no resistance from the central bank at a key market level where it had intervened earlier this year.

The dollar rose 0.3% to close at 4.2061 reais, a full cent above the previous all-time closing high of 4.1957 reais on Sept. 13 last year, but perhaps more significantly, comfortably above the 4.20 mark.

That is roughly where the central bank intervened in August this year, selling dollars outright on the spot market for the first time in a decade as the currency approached its record low of around 4.25 per dollar struck in 2015.

“4.20 is an important level and we’ve been around here too long. The central bank is nowhere to be seen,” said one money manager in Sao Paulo.

“The central bank’s absence is a big reason” for the real’s slide on Monday, agreed an economist in Sao Paulo, noting that corporate demand for dollars helped push the local currency lower.

The wider backdrop is also broadly negative for the real, analysts said, pointing to record low and falling interest rates, disappointingly weak inflows from abroad at a recent oil mega-auction, and an unnerving regional and domestic political landscape.

“It’s a kind of a snowball effect,” said a foreign exchange trader in Sao Paulo.

Brazilian interest rates are expected to be cut to a new low of 4.25% by the end of next year, according to the central bank’s latest weekly ‘FOCUS’ survey of economists on Monday, which also showed inflation heading further below target. (Reporting by Jamie McGeever Editing by Chizu Nomiyama and Richard Chang)

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