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Fernando N. Oliveira
''The Market of Foreign Exchange Hedge in Brazil: Reaction of Financial Institutions to Interventions of the Central Bank''
( 2014, Vol. 34 No.1 )
Between 1999 and 2002, Brazil's Central Bank sold expressive amounts of dollar indexed debt and foreign exchange swaps. This paper shows that in periods of high volatility of the exchange rate, first semester of 1999 and second semester of 2002, the Central Bank of Brazil increased the foreign exchange hedge, but the financial institutions used this to reduce their foreign exchange exposure. In contrast, increases in foreign hedge during periods of low volatility of the exchange rate were transferred to the productive sector.
Keywords: foreign exchange swaps, central bank interventions, foreign exchange risk
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
F3 - International Finance: General
Manuscript Received : Apr 19 2012 Manuscript Accepted : Feb 04 2014

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