Brazil’s central bank rejected all bids in an auction today to sell and repurchase dollars aimed at stemming a liquidity squeeze affecting local lenders.
The real extended gains after the central bank announced that it was offering repo agreements for the first time since the credit crunch following Lehman Brothers Holding Inc.’s 2008 collapse. Investors pulled $1.5 billion out of Brazil from Oct. 1 through Dec. 9 as they fled to lower risk investments to protect themselves from the deepening European debt crisis.
