Brazil's real gains after dollar auctions, Lula's remarks on central bank
BY Reuters | ECONOMIC | 12/20/24 11:35 AM EST*
Brazil's real gains nearly 0.9% against U.S. dollar after market interventions
*
President Lula supports central bank independence, boosting market confidence
*
Congress approves key fiscal package after doubts about its passage
*
(Adds closing rate on paragraph 1, information from Lula's social media post and on paragraphs 1-3 and 9, quote from Roberto Campos Neto on paragraph 4, details on Congress voting on paragraphs 7-8)
SAO PAULO, Dec 20 (Reuters) - Brazil's embattled real gained 0.87% against the U.S. dollar on Friday after a series of dollar auctions and as Congress advanced on a key spending package and the president made remarks showing support for central bank independence.
The real closed at 6.071 per greenback on Friday afternoon, gaining after President Luiz Inacio Lula da Silva shared video of himself shaking the hand of incoming central bank chief Gabriel Galipolo, telling Galipolo that he "will be (the chief) with the greatest autonomy the central bank has ever had."
The move appeared to assure shaky markets, with the real extending the previous day's rise after a steep sell-off that took the currency to all-time lows earlier this week amid fiscal concerns and the dollar's recent rally.
"I want you to know that there will never be, from the presidency's side, any interference with the work you have to do at the central bank," Lula said in the video.
In a central bank livestream on Friday, outgoing chief Roberto Campos Neto emphasized that the institution's technical stance will remain unchanged after his departure.
The real strengthened 1% to trade after Lula's video was posted and closed the session with some distance from the historic low near 6.30 per U.S. dollar the currency hit on Wednesday.
Earlier on Friday, Brazil's Congress approved the remaining points of the government-proposed fiscal package that includes measures to contain spending aimed at putting the country's finances on a more sustainable path.
Doubts about whether lawmakers would approve it in time had weighed on local markets in recent days.
In the same video addressing Galipolo, Lula said the government did what was necessary to protect Brazil's fiscal rule and would remain watchful for the need for further actions.
Also on Friday, the Brazilian central bank intervened in the market unloading $3 billion in a spot dollar auction - a move that was followed by two auctions with repurchase agreements totaling $4 billion.
The second auction with a repurchase agreement, announced late on Thursday, had to be called twice because of technical issues with the central bank's systems, according to the monetary authority's press office.
The bank has held several spot interventions since last week, selling a total of $16.75 billion, in addition to dollar auctions with repurchase agreements that totaled $11 billion.
Finance Minister Fernando Haddad told reporters on Friday that he believes a "communication problem" contributed to the recent weakness of Brazil's currency, adding that some "corrections" needed to be made. (Reporting by Fernando Cardoso, Gabriel Araujo and Isabel Teles; Additional reporting by Bernardo Caram; Editing by Andrea Ricci, William Maclean and Daniel Wallis)