When Brazil’s central bank stepped into the market to defend the country’s weakening currency last month, many were a little bemused.
After all, the country’s finance minister, Guido Mantega, has spent the best part of this year waging a currency war against the dollar and complaining about just how strong the Brazilian real is.
But all became a little clearer on Wednesday night. Vale, the Brazilian mining giant, shocked analysts by reporting an 18 per cent plunge in third-quarter net profits. And the culprit? A $2.19bn currency loss and another $568m hit on derivatives related to foreign exchange and interest rate bets.
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