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A quiet dispute has been unfolding between two groups of foreign exchange dealers, each trying to shape the Central Bank of Brazil’s stance on whether to roll over or let expire its “linha” auctions—dollar sales with a repurchase commitment.
Fresh diplomatic tensions between Brazil and the United States rattled local markets, heightening risk perceptions and fueling a sharp rise in long-term interest rates while the dollar climbed back to R$5.43. The trigger was a ruling by Federal Supreme Court Justice Flavio Dino that foreign laws and judicial orders have no immediate validity in Brazil.