December 5, 2013
Matthew Malinowski & Raymond Colitt – Bloomberg, 12/05/2013
Brazil’s central bank said its current pace of interest rate increases remains appropriate to rein in consumer prices, repeating language it used to justify previous half-percentage-point increases. Swap rates rose.
Policy makers, led by President Alexandre Tombini, voted unanimously on Nov. 27 to raise the benchmark Selic rate to 10 percent from 9.5 percent, marking the fifth straight 50 basis-point increase. Monetary policy must remain especially vigilant, officials said in the minutes to their Nov. 26-27 meeting released on the bank’s website.
The central bank has raised borrowing costs by 275 basis points since April as the real dropped the most among major currencies in the past six months and deteriorating fiscal accounts sparked investor concern over a credit downgrade. Indonesia and Pakistan are the only other major economies tracked by Bloomberg that have boosted rates this year.
November 4, 2013
Adriana Arai, Marisa Castellani & Arnaldo Galvao – Bloomberg, 11/04/2013
Brazil plans to reduce lending by its development bank by about 20 percent next year to shore up finances after posting the biggest budget deficit in almost four years, fueling speculation the nation’s credit rating may be cut. Local swap rates fell.
Finance Minister Guido Mantega said in an interview that state lender BNDES will provide about 150 billion reais ($66.6 billion) in new loans in 2014, compared with an estimated 190 billion reais this year. That would bring BNDES credit a little below 2012 levels. The government will freeze BNDES lending to states and municipalities, unwind tax breaks on consumer goods and keep current expenditures under control, the minister said.
“With respect to state banks, we will reduce stimulus,” Mantega said at his Sao Paulo office on Nov. 1. Lending “will be more focused and we will reduce subsidies.”
September 17, 2013
Blake Schmidt – Bloomberg, 09/17/2013
Brazil’s real climbed for the first time in three days as the central bank prepared to roll over foreign-exchange swap contracts to support the currency in an effort to curb inflation.
The real appreciated 0.5 percent to 2.2721 per U.S. dollar at 9:55 a.m. in Sao Paulo, the strongest level on a closing basis since Aug. 9. Swap rates on contracts maturing in January 2015 declined three basis points, or 0.03 percentage point, to 10.41 percent.
The currency has rallied 7.3 percent since Aug. 22, when the central bank announced a $60 billion intervention program of currency swaps and foreign-exchange credit lines through the end of the year. Today’s rollover of currency swaps is in addition to an auction of new contracts.
August 21, 2013
Blake Schmidt & Josue Leonel – Bloomberg, 08/21/2013
Brazil’s swap rates climbed after a report indicated faster-than-forecast inflation, reviving speculation that the central bank will quicken the pace of increases in borrowing costs.
Swap rates due in January 2016 rose 11 basis points, or 0.11 percentage point, to 11.26 percent at 10:05 a.m. in Sao Paulo. The real dropped 0.8 percent to 2.4138 per U.S. dollar, the weakest level on a closing basis since March 2009.
“While the data was close to estimates, it was still bad and shows that inflation remains a concern,” Cristiano Oliveira, the chief economist at Banco Fibra SA, said in a phone interview from Sao Paulo. “The real should have an impact on inflation in coming months and quarters.”
August 13, 2013
Gabrielle Coppola & Josue Leonel – Bloomberg, 08/13/2013
Brazil’s swap rates rose for a second day as concern grew that a weaker currency will fuel inflation and compel the central bank to extend its cycle of interest-rate increases.
Swap rates on the contract due in January 2015 jumped 12 basis points, or 0.12 percentage point to 9.84 percent at 9:47 a.m. in Sao Paulo after rising 12 basis points yesterday. The real declined for a second day, falling 0.5 percent to 2.2997 per dollar.
Consumer inflation in Brazil will probably accelerate this month and the decline in the real is undoubtedly fueling price increases, Carlos Hamilton, the central bank’s economic policy director, said at an event in Belem yesterday. The real has lost 13 percent in the past three months, the most among major emerging-market currencies, boosting the cost of imports.
August 2, 2013
Blake Schmidt & Josue Leonel – Bloomberg, 08/01/2013
Brazil’s swap rates climbed the most in six weeks as higher industrial production spurred speculation that the central bank will sustain the pace of increases in borrowing costs to curb inflation.
Swap rates due in January 2015 rose 25 basis points, or 0.25 percentage point, to 9.84 percent in Sao Paulo, the biggest increase since June 18. The real dropped 1.2 percent to 2.3042 per U.S. dollar, the weakest level since March 2009.
Industrial output rose 1.9 percent in June from a month earlier, exceeding the 1.3 percent median forecast of economists surveyed by Bloomberg. Policy makers raised the target lending rate by a half-percentage point July 10 to 8.50 percent, the third advance this year. The central bank said in minutes of the meeting that it is appropriate to maintain the pace of increases in borrowing costs to curb inflation.
February 26, 2013
Gabrielle Coppola & Josue Leonel – Bloomberg, 02/26/2013
Brazil’s swap rates dropped as the unemployment rate rose in January more than forecast, bolstering speculation policy makers will refrain from increasing borrowing costs amid tepid economic growth.
Finance Minister Guido Mantega said in New York that February inflation has been more “benign” and that the government has no plans to change the transactions tax known as IOF. The central bank will decide next week whether to hold the target rate at a record low 7.25 percent for a third meeting to support the economy even as inflation has exceeded the 4.5 percent midpoint of its target range for more than two years.
Swap rates on the contract due in January 2015 decreased five basis points, or 0.05 percentage point, to 8.42 percent at 1:43 p.m. in Sao Paulo. The real slid 0.4 percent to 1.9897 per U.S. dollar, paring its advance in February to 0.1 percent.