CBB director speaks on dollar intervention, provokes market anger and opposition calls for investigation of OPG

Friday’s broadcast with Paulo Guedes and the Central Bank promoted by Itaú provoked the anger of the financial market and the opposition to the government.

Central Bank director speaks on dollar intervention, provokes market anger and opposition asks PGRNOTÍCIAS for investigation
Fabio Kanczuk, the director of the Brazilian Central Bank, provoked the anger of the financial market last Friday during a live promoted by Itaú, when he said that the Central Bank was preparing a strong intervention in the dollar for the end of this year.

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According to Veja magazine, the financial market reacted negatively to Kanczuk’s speech, which it said during the broadcast:

„The market needs to be thick, thick enough to withstand a very large flow that will happen at the end of the year, and the Central Bank (is) thinking of alternatives on how not to let this flow be disruptive“.

The statement ended up making worse the bad impression left by Economy Minister Paulo Guedes at the same event and gave the impression that the statements were articulated between the Central Bank and the Ministry of Economy – something that was blatantly opposed to the „autonomy“ of the Central Bank publicly defended by Guedes.

On that occasion, the Economics Minister, who this year saw billions of dollars in foreign exchange reserves melt into the hands of the Central Bank, tried to sell the idea that the high value of Brazil’s currency – which is experiencing its greatest devaluation in history – makes the size of Brazil’s international reserves „incompatible“.

Faced with the disastrous reaction, the Central Bank itself issued a note denying that there will be intervention and that it does not anticipate its actions in the market:

„The Central Bank reiterates that it continually evaluates the functioning of the exchange market and makes it clear that it does not anticipate any decisions on intervention, rejecting any interpretations in this regard“.

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According to Veja, with the market’s criticism of Guedes and even the president of the Central Bank, Roberto Campos Neto, Kanczuk’s head would be the prize to try to calm the spirits of the financial market.

The opposition is also closely following the case, asking the Attorney General’s Office to investigate the relations of Guedes, Campos Neto and the Central Bank with the bank Itaú, which in addition to the transmission had a closed meeting with members of the government.

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Congressmen Enio Verri (PT-PR) and Afonso Florence (PT-BA) filed the request on Saturday, alleging that Itaú’s board „would have had access to inside information about the exchange market and the future actions of the monetary authorities, which could characterize, in theory, among other irregularities, crimes against the financial system and the securities market“. The PGR has not yet expressed its opinion on the request.

Translated with www.DeepL.com/Translator (free version)