1.   As in October, Brazilian authorities have freely sold off foreign reserves to defend the real.

2.   Brazil, where some believe the currency is overvalued, on Monday announced spending cuts and higher taxes to defend the real.

3.   Economists estimate that the government could use as much as half of its reserves to defend the real if it comes under fire from currency speculators.

4.   Fernando Henrique Cardoso, the president of Brazil, vowed Tuesday to continue to defend the real, even if higher interest rates reduce growth and increase unemployment.

5.   Brazil hopes that by letting its currency decline, or devalue, it will be able to bring interest rates lower and will spend less in defending the real.

6.   Market participants said the surprise hike showed Fraga meant business over defending the real and keeping a lid on inflation.