Brazil's real closed slightly stronger against the dollar Wednesday but kept comfortably within its range of recent weeks, as U.S. equities traded without much direction and little news stirred the market. 

The real exited active trading in Sao Paulo at BRL2.0378 to the dollar, according to Tullett Prebon via FactSet, compared with BRL2.0408 at the end of Tuesday's session.Financial markets in Brazil and elsewhere were largely quiet. The Dow Jones Industrial Average, which the local currency sometimes tracks, was recently up a scant 0.2%, while Brazil's Ibovespa index was outperforming with a 1.2% gain.

The Brazilian Labor Ministry said Tuesday it plans to raise import taxes on 100 products in a bid to help protect the country's steel, petrochemical, pharmaceutical and capital-goods sectors. Market participants said the measure appeared to spark a rally Wednesday in the shares of Brazilian steelmakers, but they see it as mostly inconsequential for the local currency.

Faced with a slowing economy, Brazil's government since early this year has sought-using taxes, capital controls and the central bank's ability to buy dollars off the local market in unscheduled auctions--to keep the real relatively weak in a bid to help manufacturers and exporters.

The measures have proven effective, with the real having reached its current levels in May and remained largely stable since then. Investors believe the Brazilian Central Bank is likely to intervene if the currency breaks out of a range between BRL2 and BRL2.10.

But the Brazilian economy has continued to slow. Santander on Wednesday reduced its estimate for Brazil's 2012 economic growth to a paltry 1.7% from 2.2%
previously, as slowing domestic consumption and weak investment come on top of a decline in industrial output.

A potential question mark going forward is whether the central bank will further cut Brazil's baseline Selic interest rate, was lowered 0.5 percentage point last week to a record low of 7.5%, capping a year-long cycle of monetary easing.

BES Investimento said in a note Wednesday that it thinks the central bank will remain on hold through the end of the year, as rising food prices have raised
concerns about the inflation outlook for Brazil.

"Our forecast assumes a 150 basis-point tightening cycle starting in August 2013, although we forecast inflation to breach the 5.8% level in the first quarter," BES Investimento said.

Investors early Thursday will have their eye on minutes from the latest meeting of the Brazilian Central Bank's monetary policy committee meeting. Local markets will be closed for a holiday Friday.