Central Bank interventions: Brazil can use up to US$120 billion and keep adequate reserves

Used for countries that do not issue reserve currencies, the ARA calculation is based on a few variables such as total reserves, short-term foreign debt, and imports forecast for the next 12 months.

RIO DE JANEIRO, BRAZIL - The Brazilian Central Bank (BC) can use up to US$ 120 billion to act on the exchange rate when it deems necessary and still keep international reserves at an adequate level. The calculation is made by Bráulio Borges, senior economist at LCA Consultores, based on the ARA methodology (Assessing Reserve Adequacy).

A methodology used by the International Monetary Fund (IMF) to compare countries' reserves with their financial obligations abroad, ARA establishes that the adequate level of reserves is between 1 and 1.5, on its own scale. Brazil ended last year with US$ 356 billion . . .

To read the full NEWS and much more, Subscribe to our Premium Membership Plan. Already Subscribed?