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One notable factor was the Brazilian Central Bank's intervention in the market. By selling dollars from the country’s reserves to keep the exchange rate low, the Central Bank aimed to reduce inflationary pressures and food prices affected by dollar depreciation. However, this comes with significant risk: the depletion of Brazil’s reserves could ultimately expose the country to speculative attacks on its currency.
Brazil's dollar reserves are large—about $300 billion—but prudence is essential to avoid reaching levels that could attract speculative behavior. The concern is that if reserves fall below a certain threshold (e.g., $100 billion), Brazil might become a target for currency speculation, a scenario that has happened in the past.