August 21, 2014
Kenneth Rapoza – Forbes, 8/20/2014
Brazil’s Central Bank injected another $12 billion into the economy on Wednesday following analyst projections that this year’s GDP will print at just 0.79%.
This is the second time the Central Bank has provided some form of stimulus to lenders. In July, it provided around $21 billion to banks to induce lending.
Brazilian equities have been on a tear lately no matter what the economic fundamentals suggest. The iSharesMSCI Brazil (EWZ) exchange traded fund is up 6.07% in the past five days, clobbering the benchmark MSCI Emerging Markets index by roughly 500 basis points.
August 20, 2014
Matthew Malinowski and Karen Eeuwens – Bloomberg, 8/20/2014
Brazil’s central bank has eased rules on reserve requirement for a second time this quarter in a bid to boost credit in a slowing economy.
The bank published the rules in today’s Official Gazette, altering rules for payments on non-cash deposits. The changes will channel about 10 billion reais ($4.5 billion) into credit, the bank said in a statement published on its website. The move follows the bank’s decision in July to free up 30 billion reais, according to the statement.
President Dilma Rousseff’s administration is struggling to contain above-target inflation without causing growth to deteriorate further. The central bank has kept the benchmark interest-rate at the highest level since 2012, after lifting the key rate by 375 basis points in the year through April. The moves haven’t improved the economic outlook, according to analysts surveyed by the central bank, who forecast growth will slow and inflation will accelerate this year compared to last year.
August 19, 2014
Paulo Trevisani – The Wall Street Journal, 8/19/2014
True to its habit of offering a steady flow of rosy economic forecasts, the Brazilian government is expecting the second half of 2014 will be better than the first, a top official said Monday.
Brazil’s economy expanded by a meager 0.2% in the first quarter of this year compared with the previous quarter. Second-quarter results aren’t out yet, but analysts expect them to be about as bleak.
That’s disappointing for officials hoping the economy would grow faster this year than the modest 2.5% pace clocked in 2013. In the central bank’s latest weekly survey of about 100 private-sector economists released Monday, the group projected gross domestic product would rise 0.79% this year, down from its prior forecast of 0.81%.
August 8, 2014
Paulo Trevisani & Priscilla Oliveira – The Wall Street Journal, 8/7/2014
Brazil’s government is again offering help to struggling power distributors caught between rising wholesale costs and controlled retail prices.
The Finance Ministry said on Thursday that it is making available 6.6 billion Brazilian reais ($2.9 billion) in credit lines to the sector. The funds will come from private and government-controlled banks.
The fresh money is meant to cover a gap in the power companies’ accounts, as a prolonged drought significantly reduced generation capacity in Brazil’s mainly hydroelectric generated power grid.
August 7, 2014
Merco Press, 8/6/2014
“We certainly cannot speak of a crisis,” Tombini told lawmakers at the Senate’s economic affairs committee. “I want inflation to be lower than it is now, but it remains under control.”
Tombini’s remarks are at odds with the view of some economists and investors, who have noted recently that inflation is running above the central bank’s target range and economic growth has ground to a near halt.
President Dilma Rousseff’s main contender in the October presidential election, Senator Aecio Neves, has recently described this outlook as one of “stagflation”.
August 6, 2014
Alexandre Spatuzza – Recharge News, 8/6/2014
August 5, 2014
Filipe Pacheco – Bloomberg Businessweek, 8/5/2014
Brazil’s real declined to a two-month low on speculation that evidence of U.S. economic strength will spur the Federal Reserve to begin raising borrowing costs faster than expected.
The real fell 0.7 percent to 2.2746 per dollar at 11:54 a.m. in Sao Paulo, the weakest on a closing basis since June 4. The drop was the biggest among 16 major currencies tracked by Bloomberg after South Africa’s rand. Swap rates, a gauge of expectations for interest-rate moves, increased 17 basis points, or 0.17 percentage point, to 11.76 percent on contracts maturing in January 2017.
“Stronger numbers are coming from the U.S. economy, and any indication that monetary policy may change there before markets expected brings concern to emerging-market investors, and the currency is impacted,” Sidnei Nehme, executive director at NGO Corretora in Sao Paulo, said in a telephone interview. “The real tends to trade closer to 2.30 per dollar for now than toward the 2.25 level.”
August 1, 2014
Filipe Pacheco – Bloomberg, 8/1/2014
Brazil’s real was headed for its biggest weekly decline since January as the central bank refrained from starting a rollover of foreign-exchange swap contracts supporting the currency.
The real declined 1.3 percent to 2.2590 per U.S. dollar this week, the most since Jan. 24, after advancing 0.2 percent today as of 3:42 p.m. in Sao Paulo. Swap rates, a gauge of expectations for interest-rate moves, increased 11 basis points, or 0.11 percentage point, to 11.60 percent on contracts due in January 2017. They have climbed 36 basis points since July 25.
While the central bank sold $198.7 million of currency swaps today to bolster the real and limit import price increases, it allowed the remaining $2.81 billion of contracts maturing at the beginning of the month to expire and hasn’t called an auction to extend the maturity on $10.07 billion in swaps maturing Sept. 1. The sale of swaps has helped push the currency up 4.3 percent this year.
July 30, 2014
Carlos Eduardo Lins da Silva – Executive editor of Política Externa, Wilson Center Global Fellow
Its initial landing, projected at US$ 3.6 billion a year starting in 2016, will limit the bank’s impact
The sixth summit of the BRICS took place at a time of low economic growth for the group. The BRICS gained prominence after the global financial crisis of 2008, which put the leading capitalist economies on the brink of the abyss and made room for big emerging countries at the decision making table.
The average growth for the five countries in 2014 is expected to be to around 5%, or half of what was recorded eight years ago, with one important difference: unlike 2008, the large economies are now recovering from higher levels of development when compared with the BRICS.
The group made important institutional progress in its sixth summit, held in the Brazilian city of Fortaleza. The event marked the official launching of the New Development Bank. However, it did not elevate the BRICS to an organization capable of substantially influencing global geopolitics and effectively countering the established economic powers or challenging the apparatus they built after World War II to ensure hegemony in the macroeconomic policy decision making. Read the rest of this entry »