Brazilian Banks Must Purchase Some US$30 Billion in Foreign Currency by Year-end

The first over-hedge payment of US$ 15 billion (R$78 billion), must be completed by the end of the year. The second should be completed by the end of 2021.

RIO DE JANEIRO, BRAZIL - Brazilian banks with investments abroad are experiencing a race for dollars this year. Institutions with branches abroad will spend some US$30 billion to settle exchange protection contracts by 2022.

This event should impact the dollar's rate. With the Brazilian real devalued, the Central Bank has prepared measures to mitigate the impact of the increase in demand for the currency.

Exchange protection contracts are called hedges. They work as a kind of insurance to protect investors from losses with exchange rate fluctuation. These contracts are taxed in Brazil at 48%.

The avalanche of funds needed . . .

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