Brazil central bank extends lower time deposit reserve requirements to November

Brazil's central bank decided to extend a lower 17% reserve requirement on time deposits to November, pointing toward "the cyclical persistence in liquidity restrictions for bank borrowing."

Banco Central do Brasil temporarily lowered the requirement to 17% in March 2020 to mitigate the economic impact of the COVID-19 pandemic. The reserve requirement was scheduled to rise to 20% in April 2021 but keeping it at 17% for now will help free up around 40 billion Brazilian reais, the bank said.

It noted that new financial liquidity lines for banks will be introduced by the end of 2021, which should mitigate the impact of the reserve requirement rising to 20% in November and support the normal functioning of the credit market.

Brazilian lenders currently have approximately 205 billion reais tied up in time deposit reserve requirements, according to the central bank.

As of March 10, US$1 was equivalent to 5.70 Brazilian reais.