Sept 24 (Reuters) - Brazil’s central bank said on Friday it would hold additional twice weekly auctions of traditional currency swaps, starting Sept. 27, to address demand from banks dismantling their “over-hedge” position to protect against exchange rate fluctuations. The auctions will be held on Mondays and Wednesdays. The central bank said in a statement that on Monday it would auction 14,000 traditional swap contracts, equivalent to $700 million, with maturities between June 1 and Sept. 1, 2022. Earlier this month, central bank chief Roberto Campos Neto said that the government would probably need to intervene in foreign exchange markets to deal with demand related to dismantling of the over-hedge positions. Banks stopped pursuing over-hedge positions after changes to tax rules in early 2020. Undoing those positions requires banks to purchase dollars. At the end of 2020, the estimated dollar purchase volume related to over-hedging was between $15 billion and $16 billion. If the central bank keeps up twice weekly sales at the pace of the auction planned for Monday through the end of the year, it will inject at least $18 billion into the market. Separately, the bank will continue to rollover existing swap contracts due to expire. On Monday, it will hold an auction to roll over 15,000 swap contracts worth $750 million due to expire on Dec. 1. Reporting by Jose de Castro; Writing by Jake Spring; Editing by Sam Holmes Our Standards: The Thomson Reuters Trust Principles.