Brazil c.bank to offer $500 mln in repo auction

Thu Sep 18, 2008 5:31pm EDT
SAO PAULO, Sept 18 (Reuters) - Brazil's central bank said it will offer dollar repurchase agreements on Friday for the first time since 2003, seeking to sell $500 million in an auction aimed at supplying the currency market with liquidity.
Central Bank President Henrique Meirelles said earlier on Thursday in New York that the bank would hold the auctions as often as it deems necessary to ease the liquidity crunch in the foreign exchange market.
The central bank will buy back the dollars at a fixed price after 30 days after the settlement date, meaning it will temporarily add reserves to the banking system.
Brazil's currency closed 2.8 percent weaker on Thursday, paring losses of as much as 5 percent earlier after the central bank said it would offer the repurchase agreements.
The real BRBY slumped to 1.921 per U.S. dollar from Wednesday's close of 1.867, crossing the 1.9-per-dollar mark for the first time in one year.
(Reporting by Silvio Cascione; Editing by Diane Craft)