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Brazil's currency rises after hawkish rate decision, FX auction

BY Reuters | ECONOMIC | 07:17 AM EST

BRASILIA, Dec 12 (Reuters) - Brazil's currency strengthened more than 1% against the U.S. dollar on Thursday, following a larger-than-expected interest rate hike by the central bank and its indication of further aggressive increases.

Policymakers raised interest rates by a greater-than-expected 100 basis points to 12.25%, and pointed to matching hikes for the next two meetings, signaling that a shift to a new government-named governor will not weaken its determination to battle inflation.

Shortly before the rate decision, the central bank also announced U.S. dollar auctions with repurchase agreements of up to $4 billion to be held on Thursday. (Reporting by Marcela Ayres; Editing by Gabriel Araujo)

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Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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