Frustration over pre-salt auction fueled dollar rally

The United States currency hit its highest nominal value since the Plano Real reform in 1994. Central Bank governor Roberto Campos Neto blamed lower-than-expected revenue from the petroleum bidding round on November 6th.

Agência Brasil

Brasília – Frustration stemming from lower-than-expected US dollar inflows during the November 6 pre-salt oil and gas auction is the culprit for the recent rally of the US dollar relative to Brazil’s currency, the real, Brazilian Central Bank Roberto Campos Neto said. He joined a public hearing at the Senate’s Economic Affairs Commission this Tuesday (19).

Subscription bonus payments from the auction amounted to BRL 69.96 billion (USD 16.66 billion at today’s exchange rate). A windfall of as much as BRL 106.5 billion (USD 25.3 billion) was expected. “More recently, indeed, there was frustration with the auction from parties that had positioned themselves for this movement. Since it didn’t come to pass, there was a flight of dollars, but we are watching it closely,” he said.

Trading ended on Monday (18) with the dollar selling for over BRL 4.20, the highest nominal value since the real was created in 1994. Campos Neto said, however, that the dollar is rallying globally, and that exporters and importers alike “hold down the exchange rate” by wiring funds overseas.

Translated by Gabriel Pomerancblum

Marcello Casal Jr./Agência Brasil

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