March 7, 2014
Merco Press, 3/7/2014
“Our proposal is to stimulate trade in local currencies through central banks” said Alberto Alzueta, chairman of the chamber. “The Brazilian exporter sells in reales and the Argentine buyer pays with Pesos, this will automatically increase trade and reduce demand for dollars”.
Likewise Jose Francisco Marcondes, president of the Brazil-Venezuela Federation of Chambers supports the initiative: “it is absolutely positive and adequate to organize this kind of trade which cuts us lose from the US dollar which we don’t issue and from inflation”.
The comments follow reports from Brazil’s main financial daily Valor Económico which estimates Brazilian exports to Argentina and Venezuela this year can be expected to drop by at least 4 billion dollars.
March 7, 2014
Filipe Pacheco – Bloomberg, 3/7/2014
The real declined to a one-week low a day after Brazil posted a trade deficit and foreign-exchange outflows, reducing the currency’s allure.
The currency depreciated 0.2 percent to 2.3302 per U.S. dollar at 9:48 a.m. in Sao Paulo, the biggest decline among major currencies tracked by Bloomberg after the South African rand. The real pared its weekly advance to 0.7 percent. Swap rates on contracts due in January 2017 rose four basis points, or 0.04 percentage point, to 12.41 percent, extending their increase since Feb. 28 to 15 basis points.
“The market didn’t like the trade deficit and the outflow numbers from yesterday,” Jose Carlos Amado, a foreign-exchange trader at Renascenca DTVM in Sao Paulo, said in a phone interview. “That should weaken the currency. It should get back to a lower level, around 2.34 per dollar.”
March 6, 2014
Filipe Pacheco – Bloomberg, 3/6/2014
Brazil’s swap rates climbed after the central bank said that it would be appropriate to keep adjustinginterest rates given persistent inflation.
Contracts due in January 2017 rose five basis points, or 0.05 percentage point, to 12.33 percent at 11:34 a.m. in Sao Paulo. The real advanced 0.5 percent to 2.3080 per dollar today, the strongest level on a closing basis since Dec. 10.
The central bank, which slowed the pace of interest-rate increases to 25 basis points last month after six straight half-point adjustments, said in minutes of the meeting published today that it considers “the continuation of the adjustment of monetary conditions under way” to be appropriate. Policy makers have raised borrowing costs 350 basis points since April to 10.75 percent. Consumer prices jumped 5.65 percent in the year through mid-February, above the bank’s 4.5 percent target.
“The minutes show there will be a change of 0.25 percentage point in the next meeting,” Solange Srour, the chief economist at ARX Investimentos in Rio de Janeiro, said in a phone interview. “It showed that there still are concerns regarding inflation.”
March 6, 2014
Matthew Malinwoski & Raymond Colitt – Bloomberg, 3/6/2014
Brazil’s central bank signaled today it will continue tightening monetary policy as above-target inflation remains persistent. Swap rates rose.
Policy makers led by bank President Alexandre Tombini voted unanimously on Feb. 26 to slow the pace of rate increases, raising the benchmark Selic rate to 10.75 percent from 10.5 percent after six straight half-point increases. The central bank’s monetary policy will help offset inflationary pressure from a currency depreciation, officials said in the minutes of their Feb. 25-26 meeting published online today.
The central bank considers “appropriate the continuation of the adjustment of monetary conditions under way,” according to the minutes. “Currency depreciation constitutes a source of inflationary pressure in the shorter term.”
March 6, 2014
Dom Phillips – The Washington Post, 3/5/2014
José de Moraes leapt into the air as if possessed by the frenzied rhythm that his drummers were beating out. As master of the drum section of his Carnaval street party, or bloco, his job was to choreograph the furious samba beats that sent revelers wild.
He leapt and danced like a rubber man in the midst of the bloco, called Paraty do Amanhã (Paraty of Tomorrow), on a narrow street in this popular tourist town on the Rio de Janeiro coast that attracts more than a million visitors a year.
For Brazilians, Carnaval is a five-day national escape from the harsher realities of life. The year in Brazil only really begins after Carnaval, which wrapped up Tuesday.
March 5, 2014
Alexandra Wexler, Jeffrey T. Lewis & Leslie Josephs – The Wall Street Journal, 3/4/2014
Brazil’s worst drought in decades is decimating crops but breathing new life into battered commodity markets.
It hardly has rained in some of the South American country’s top farming regions since the start of the year, a period when precipitation is usually the heaviest. Traders, analysts and government forecasters who were calling for record harvests in coffee, sugar and soybeans as recently as December are cutting production estimates, triggering a spike in futures prices that may translate into higher costs for consumers later in the year.
Futures prices for the arabica coffee variety are up 67% since the start of the year. Raw-sugar prices have risen 8%. Soybeans, which have been affected by drought in some areas and too much rain in others, also are up 8%.
March 4, 2014
Louie Grint – Daily Finance, 3/3/2014
Adding to the uncertainty that most emerging markets are experiencing, a local event is stirring up volatility in Brazilian stocks. Presidential and legislature elections will take place in the country in October, and three candidates have real chances of taking office. The favorite is current President Dilma Rousseff, who is running for re-election, and then we have Aecio Neves and Eduardo Campos.
How does this matter to Brazilian ADRs?
A key point here is the degree of government intervention. Investors sense that if President Dilma Rousseff is re-elected, government intervention will continue, damaging companies’ profitability level. The other two candidates are seen as more market-friendly, and they still have a chance, especially with the current slowdown in the economy. So let’s see how three ADRs are performing.
First, here’s a Brazilian forestry leader and the world’s largest producer of hardwood market pulp, Fibria Celulose . It has an annual production capacity of approximately 5.3 million tons.
March 4, 2014
Leslie Josephs – The Wall Street Journal, 3/3/2014
Coffee prices are getting an extra kick from Brazil’s Carnival.
Trading volumes have been lower during the annual festival as many Brazilians take vacation, and many farmers, who usually take the “short” end of a contract when locking in prices, are absent, traders said.
This situation has added fuel to this year’s sharp rally in the $11 billion arabica coffee-futures market. Investors and traders have been snapping up coffee futures on concerns that unusually hot and dry weather in Brazil’s key growing regions will dent coffee-bean output.
March 4, 2014
Ilan Goldfajn – O Estado de S. Paulo, 3/4/2014
It is uncommon to have low unemployment rates in a weak economy. In general, the slowdown of the economy affects the labor market, at least after a certain period. However, in recent years, Brazil’s GDP has grown around 2% percent, while unemployment rates continued to fall to 5 % percent. This is important. After all, unemployment has a unique relevance for society. In the economy, it affects purchasing power and consumption, as well as production. Hence, unemployment is crucial for politics, for it can decide an election. But what explains this paradox between economic growth and unemployment, and what are the consequences for the economy?
According to Ilan Goldfajn, chief economist at Itaú Unibanco, one important factor to explain this phenomenon in Brazil is demographic changes, along with a declined rate of youth participating in the economy.
To read original article in Portuguese, click here.
March 3, 2014
Simon Romero – The New York Times, 2/28/2014
IN his fits of rage, Eduardo Paes, the mayor of Rio de Janeiro, has thrown a stapler at one aide. He threw an ashtray at another. He berated a councilwoman in her chambers, calling her a tramp. Stunning diners at a crowded Japanese restaurant where he was being taunted by one constituent, a singer in a rock band, he punched the man in the face.
While Mr. Paes, 44, has apologized to the targets of his wrath after each episode, he adds that he is under a lot of stress. Normally clocking 15-hour days as he tears up and rebuilds parts of Rio in the most far-reaching overhaul of the city in decades, Mr. Paes is finding that consensus over his plans is elusive.
“Don’t ever in your life do a World Cup and the Olympic Games at the same time,” Mr. Paes recently said at a debate here on Rio’s transformation, making at a stab at gallows humor over the street protests that have seized the city over the past year. “This will make your life almost impossible.”