Brazil's central bank will not extend forex intervention program

Brazil's central bank will not extend forex intervention program

© Marko Djurica / Reuters

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The bank will, however, roll over all swaps expiring after May 1.

The real has been one of the worst performing currencies this month losing 10 percent against the dollar.

While all emerging market currencies have suffered from fears of higher U.S. interest rates, a number of domestic problems have further weighed on the real.

Among those issues are Brazil's current account deficit and a massive corruption scandal at state-run oil company Petrobras , as well as uncertainty about the approval of austerity measures proposed by President Dilma Rousseff, whose political coalition is increasingly fragmented.

Uncertainty about the central bank's strategy to intervene in the foreign exchange market had also added to the long list of problems weighing on the real.

The central bank also said it will sell dollars with repurchase agreements if it needs to boost liquidity in the forex market.

The bank said if deemed necessary it may also use "additional foreign exchange instruments at its disposal" to stabilize the exchange rate.

The foreign exchange program has provided investors with a daily supply of currency swaps, derivatives that offer protection against currency losses, since August 2013.

The bank has recently been offering $100 million worth of currency swaps in daily auctions Mondays through Fridays.

(Reporting by Stephen Eisenhammer; Editing by Ken Wills and Lisa Shumaker)

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