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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Can Election Put Brazil Back on Path to Fast Growth?

September 30, 2014

Paulo Trevisani – The Wall Street Journal, 09/30/2014

Brazilians face many options in the Oct. 5 vote, but for economists and investors the options are clear: It is reform or die.

Latin America’s largest economy has weakened in the past four years and now growth is near zero, inflation is high and business confidence is depressed. Central-bank interventions keep the currency from a free fall.

But with unemployment low and many voters satisfied with greatly expanded welfare programs, incumbent President Dilma Rousseff may well end up getting a second term.

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Brazil’s Rousseff extends lead over Silva in election poll

September 30, 2014

Anthony Boadle – Reuters, 09/29/2014

President Dilma Rousseff’s expected victory margin over closest rival Marina Silva has surged to 9 percentage points in a second-round runoff in Brazil’s presidential election, an opinion poll showed on Monday, causing stocks and the real currency to tumble.

Rousseff would win the runoff with 47.7 percent of the votes against 38.7 percent for Silva, polling firm MDA said, widening her lead from the one-point advantage she had in the previous survey by the firm last week.

Another survey released later on Monday by the Vox Populi polling firm showed Rousseff with a seven-point lead over Silva in a runoff, unchanged from a week earlier.

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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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Brazil in narrow presidential race as Silva captures imagination

September 30, 2014

Wyre Davies – BBC News, 09/28/2014

It boasts the world’s seventh largest economy but Brazilian society is still deeply divided and unequal.

Racism and corruption are still rife yet a mixed-race woman, born into almost absolute poverty in the jungle interior, could soon be elected to lead this country of 200 million people.

Marina Silva is certainly an enigma. The slight, almost frail, former environmental campaigner is adored by the foreign media and by those who relish the prospect of a genuinely “green” president in Brazil.

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