(Bloomberg) -- The expiration of an all-but-forgotten Brazil Treasury bond has pushed the nation’s central bank to step into currency markets for the first time in almost two years.

The monetary authority is selling $1 billion in swaps on Tuesday to prevent a volatility spike as so-called NTN-A bonds come due on April 15. The notes, whose nominal value is linked to the currency’s variation, were sold back in 1997 and never used again. 

Now the equivalent of $3.7 billion of these bonds will be wiped out from the market, meaning that investors that carry them will be left with a currency exposure of the same amount, which needs to be hedged. Traders had already been buying dollars ahead of the expiration, making the real one of the worst performing emerging-market currencies on Monday and pushing the central bank into action. 

With currency volatility hovering near a decade-low — partially due to a calmer political scenario at home, and partially due to a global trend — the monetary authority has stayed out of markets since May 2022. Policymakers use swaps as a primary tool to intervene as it does not impact the country’s international reserves as a direct dollar spot sale would. 

The amount sold Tuesday will add to the central bank’s already-inflated currency position. At about $100 billion, the holdings make it by far the biggest player in the local currency market. 

While it’s possible that Tuesday’s auction alone will be enough to scare off traders speculating against the currency, additional dollar sales may be needed to keep the real in line with peers. The real rose 0.2% as of 12:17 p.m. in Sao Paulo, trailing most Latin American currencies. 

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