BRASILIA, March 5 (Reuters) - Funds and speculators on U.S.
futures markets amassed their largest bet against the Brazilian
real in over three months, data showed on Friday, as the
currency's latest slump prompted the first central bank
intervention this year.
The latest Commodity Futures Trading Commission data on
Friday showed that funds increased their net short position by
5,114 contracts to 21,051 contracts in the week to March 2, the
biggest net short since the week ending Nov. 22 last year.
To go short a financial asset is to effectively bet that it
will decline in value.
Rather than rebounding from its 30% against the dollar last
year, the real has fallen a further 8.7% so far this year.
Its latest slide over the period captured in the latest CFTC
data prompted the central bank into six rounds of direct
dollar-selling intervention in the spot market between Thursday
last week and Tuesday, worth over $5 billion.
Apart from the Libyan dinar and Sudanese pound, which have
both suffered huge one-off devaluations, the real is the
worst-performing currency in the world against the dollar this
year, Refinitiv data shows.
The central bank is widely expected to raise interest rates
for the first time since 2015 sooner rather than later to
counter punch inflation and a deteriorating fiscal outlook.
But with the economy possibly shrinking in the first quarter
as a devastating second wave of the COVID-19 virus sweeps the
country, higher rates could not be coming at a worse time.
On top of that, rising U.S. bond yields are pulling cash
out of emerging market assets, leaving currencies like the real
($1 = 5.70 reais)
(Reporting by Jamie McGeever
Editing by David Gregorio)