By Marcela Ayres

BRASILIA (Reuters – Brazil’s central banks said they are ready to take action in exchange markets in case of disproportionately contamination. This is in response to the fact that Russia invaded Ukraine and Brazil is closely following developments.

Thursday’s meeting of the Financial Stability Committee at the central bank highlighted that there is “low” exposure by the nation’s financial system to international tensions, given its reduced currency exposure as well as dependence on outside funding.

It stated that the Committee was attentive to recent developments in the international scene and is ready to take action to minimize any untoward contamination of prices for local assets through exchange markets channels.

The central bank stated that the “loan portfolio continues its performance well”, credit loss provisions are sufficient, and banks continue to be liquid and well capitalized.

Paulo Valle (Brazil Treasury Secretary) stated that the country was well-positioned for any potential international volatility.

Due to increased risk aversion globally, the Brazilian real lost 1.99% against USD. It remains one of the most stable currencies worldwide to this point. This is due to low equity valuations, high debt yields, and aggressive monetary tightening in order to control inflation by two-digits.

After raising the benchmark interest rate by 10.75%, the nation’s record-breaking low of 2% in March, policymakers already indicated that additional increases were needed.