A política cambial Brasileira de facto: 1999-2015

Abstract

This paper analyses the motives for foreign exchange interventions in Brazil in recent years. Using monthly data, we estimated the effects of volatility and exchange rate misalignments on the probability of intervention. Our results indicate that, as formally stated by the Brazilian Central Bank, foreign interventions have reacted to excess volatility in the exchange market, but we also find strong evidence that interventions have in fact aimed at curbing exchange rate misalignments. We find, moreover, that interventions are affected more strongly by episodes of devaluations of the local currency, vis-à-vis episodes of overvaluation, indicating asymmetric behavior of the Brazilian Central Bank.