Brazil’s Real Drop to Five-Year Low as Rousseff Support Climbs

October 1, 2014

Filipe Pacheco – Bloomberg, 10/1/2014

Brazil’s real fell to a five-year low on concern Latin America’s largest economy will struggle to recover as a voter poll showed President Dilma Rousseff winning her re-election bid.

The real declined 0.3 percent to 2.4549 per U.S. dollar at 10:03 a.m. in Sao Paulo, the lowest level on a closing basis since December 2008. The currency declined 9.5 percent in the third quarter, the worst performance among 24 emerging-market currencies after Russia’s ruble.

Rousseff has taken the lead and would win a second term in Brazil’s election this month against former Environment Minister Marina Silva, according to a Datafolha poll released yesterday after markets were closed. Speculation that a new government would revive economic growth and curb inflation helped push the real to a one-month high on Aug. 29.

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Brazil presidential rivals clash over central bank

October 1, 2014

Samantha Pearson – Financial Times, 9/30/2014

It looks like a scene from a low-budget gangster movie. Four men in suits gather around a table in a dark room to plot an apparent financial scam, winking and shaking hands.

However, this is the Brazilian central bank, or rather, an illustration of what it would look like if it were given formal autonomy, according to one of President Dilma Rousseff’s recent scaremongering campaign videos. “This would mean handing over to the bankers a huge power to make decisions about your life and your family – the interest you pay, your job, prices, and even salaries,” the narrator explains, cutting to a family whose food slowly disappears off their table.

Central bank autonomy, a seemingly obscure topic in a country where at least one in 10 adults are illiterate, has become a central controversy of the Brazilian presidential election, which kicks off on Sunday and is likely to extend to a run-off on October 26.

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U.S. Reaches Deal With Brazil Ending Cotton Dispute

October 1, 2014

Alan Bjerga – Bloomberg News, 09/30/2014

The U.S. and Brazil reached a $300 million agreement to resolve a dispute over cotton subsidies that has bedeviled the two nations for more than a decade.

The accord signed today in Washington involves a one-time U.S. payment to the Brazil Cotton Institute in return for that nation dropping all claims against the U.S., the U.S. Trade Representative said in a statement. Brazil will also not pursue any new World Trade Organization cotton claims while a five-year farm bill Congress passed in February is in effect.

“Today’s agreement brings to a close a matter which put hundreds of millions of dollars in U.S. exports at risk,” U.S. Trade Representative Michael Froman said in a statement with Agriculture Secretary Tom Vilsack. “The United States and Brazil look forward to building on this significant progress in our bilateral economic relationship.”

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Brazil Central Bank Cuts Inflation Forecast on Slow Growth

September 30, 2014

Matthew Malinowski and Mario Sergio Lima – Bloomberg, 09/29/2014

Brazil’s central bank cut its 2014 inflation forecast, saying the world’s second-biggest emerging market will grow at a “disinflationary” pace over the next quarters.

Consumer prices will rise 6.3 percent this year if policy makers keep the benchmark Selic (BZSTSETA) at 11 percent, according to the reference outlook in the quarterly inflation report published today. The inflation forecast compares with a 6.4 percent estimate for 2014 in the June report. Consumer prices will rise 5.8 percent in 2015, compared with a 5.7 percent forecast in June. Policy makers also said the economy will expand 0.7 percent this year, down from the previous estimate of 1.6 percent.

“Taking into account the growth outlook for the next quarters, the committee assesses that the output gap over the next quarters will remain in disinflationary territory,” policy makers said. They reiterated inflation will converge toward its 4.5 percent target in 2016.

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Brazilian Stocks, Currency Plummet as Presidential Election Looms

September 30, 2014

Jeffrey T. Lewis and James Ramage – The Wall Street Journal, 09/29/2014

Brazil’s stock market and currency were sent reeling Monday by signs President Dilma Rousseff is pulling ahead of her main challenger in the country’s presidential election next month.

The Brazilian real weakened to its lowest level against the dollar in nearly six years Monday, declining 2.4% to 2.4777 reais, before paring losses to 2.4543 reais later in the day. The country’s benchmark Ibovespa stock index fell as much as 5% in early trading and was down 2.2% early in the afternoon.

Brazil’s losses were among the worst in a broad selloff that hit financial markets across the developing world. Developing economies have been caught up in fears the Federal Reserve is moving closer to raising interest rates, a move that would make higher-yielding currencies, such as those in emerging markets, less attractive to investors. Concerns about protests in Hong Kong have also sent investors into less-risky assets.

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Brazil to Triple Its Marine Protected Area with World Bank’s Help

September 29, 2014

Brazzil, 9/28/2014

A Brazilian pioneer initiative will more than triple the ocean area under environmental protection in Brazil, from 5.5 million hectares to over 17.5 million, an area larger than Greece.

Approved by the World Bank Board of Directors, the US$ 18.2 million Marine Protected Areas Project will benefit the 43 million people who live in Brazil’s 514 thousand km² coast area.

Financed by the Global Environmental Fund (GEF), the project will bring far-reaching social and economic benefits, protecting the capacity of coastal ecosystems to produce food, maintain good water quality, and increasing their resilience to and recovery from degradation.

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For Labor Market, Brazil Becomes China

September 26, 2014

Kenneth Rapoza – Forbes, 9/25/2014

The unemployment rate in Rio de Janeiro state, home to 16.5 million people, is just 3%. It’s never been so low. It’s almost as if Brazil has developed some sort of China-style full-employment policy. On a national level, unemployment is just 5%. By comparison, China’s official unemployment rate is a little over 4%.

When it comes to unemployment statistics, Brazil has become China.

Brazil’s economy is slowing. It entered into a technical recession in the second quarter, defined by back-to-back quarters of economic contraction. China’s economy is slowing, with Barclays Capital economist Jian Chang in Hong Kong expecting Beijing to lower its official GDP target to 7% instead of 7.5%. Yet, miraculously, unemployment is just 4.1%, unchanged year over year.

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