Brasília – Brazilian foreign currency reserves reached US$ 288.575 billion on December 31st, 2010, according to figures disclosed by the Central Bank of Brazil (BC) on Monday (3). There was, therefore, growth of US$ 49.521 billion (20.71%) over the US$ 239.054 billion of late 2009.
The expansion was the result of the BC’s policy of purchasing the North American currency on the spot market whenever offer is excessive. The objective was to avoid strong depreciation of the dollar and, at the same time, to boost reserves, which totalled US$ 37.652 billion when former president Luiz Inácio Lula da Silva was inaugurated, in January 2003.
As was the case over the last four months, mainly, the demand of foreigners for investment in Brazil has been growing, and the BC started promoting two auctions almost every day, starting in September, to stunt the depreciation of the US currency.
Another measure promoted by the Ministry of Finance was the expansion of the Tax on Financial Operations (IOF) levied on short-term transactions in foreign currency, favoured by high interest rates.
Apart from that, the Brazilian real is still appreciating as against the dollar, which yesterday (3) was traded at below 1.66 Brazilian real for US$ 1.
*Translated by Mark Ament
