BCB intervention likely to prevent BRL weakness?

BCB finally intervened yesterday to stem the pace of BRL depreciation by auctioning 20,000 contracts (2 bln USD notional value) of FX swaps. In truth, BCB had little alternative, USD-BRL traded above 4.14 whilst volatilities surged higher such that an inverted volatility curve is now seen, althugh at exceptionally high levels in an absolute sense. 

"It is doubtful if this intervention will be successful in pre-venting further BRL weakness. Indeed what has been seen over the past 18 months for all emerging market currencies is that interventions merely succeeded in delaying idiosyncratic currency depreciations and wasting precious FX reserves", says Comemrzbank. 

They never managed to change the overall trend. This time is unlikely to be any different for BRL. As long as external and domestic conditions continue to deteriorate it is hard to make a sustainable case for BRL appreciation. 

Consequently, market participants can take advantage of BCB's efforts to bring USD-BRL lower as it gives better entry points for long positions.