February 25, 2014
Blake Schmidt & Josue Leonel – Bloomberg, 2/25/2014
Brazil’s swap rates dropped for a fourth straight day on speculation that policy makers convening for a two-day meeting will limit increases in borrowing costs to a quarter-percentage point.
Swap rates on contracts due in January 2019 sank 12 basis points, or 0.12 percentage point, to 12.44 percent at 4:32 p.m. in Sao Paulo, the lowest since Nov. 22. The real depreciated less than 0.1 percent to 2.3431 per U.S. dollar.
Policy makers will raise the target lending rate by 25 basis points tomorrow to 10.75 percent, according to the median estimate of 59 economists surveyed by Bloomberg, after six straight increases of a half-percentage point. Brazil’s construction costs index rose 8 percent in February from a year earlier, the slowest pace since September, the Getulio Vargas Foundation reported.
February 11, 2014
Blake Schmidt – Bloomberg Businessweek, 2/11/2014
Brazil’s swap rates climbed on concern policy makers will have to keep raising borrowing costs to curb inflation as the nation’s drought and heat wave contribute to higher food and energy prices.
Swap rates on contracts maturing in January 2015 rose four basis points, or 0.04 percentage point, to 11.35 percent at 12:46 p.m. in Sao Paulo, erasing earlier declines. The real depreciated 0.1 percent to 2.4120 per dollar as Federal Reserve Chairman Janet Yellen pledged to maintain the policy of scaling back in “measured steps” a U.S. stimulus program that had supported emerging markets.
Brazil’s worst drought and heat wave in decades is threatening to reduce crop yields and drive up prices. Receding levels in reservoirs may force the nation’s utilities to rely on expensive alternatives to hydroelectric power. To curb inflation, policy makers lifted the target lending rate last month by a half-percentage point for a sixth straight meeting, increasing it to 10.50 percent.
January 27, 2014
Blake Schmidt – Bloomberg, 1/27/2014
Brazil’s swap rates climbed after central bank President Alexandre Tombini said policy makers will fight inflation as the real weakens, reviving speculation that the central bank will extend increases in borrowing costs.
Swap rates on contracts maturing in January 2016 rose three basis points, or 0.03 percentage point, to 12.10 percent at 12:44 p.m. in Sao Paulo. The real depreciated 0.5 percent to 2.4092 per U.S. dollar after tumbling 2.3 percent last week as part of a broad decline in emerging-market currencies.
The central bank is combating inflation in the context of a weaker real, Tombini said at a presentation in London today. The currency has dropped 9.2 percent in the past three months on concern fiscal deterioration will lead to a lower credit rating and amid speculation that the tapering of Federal Reserve stimulus will erode demand for Brazil’s assets.
January 14, 2014
Blake Schmidt & Josue Leonel – Bloomberg, 1/14/2014
Brazil’s swap rates climbed on speculation among some traders that policy makers convening for a two-day meeting will lift borrowing costs by a half-percentage point for a sixth straight time to curb inflation.
Swap rates on contracts maturing in January 2017 were up for a second consecutive day, rising seven basis points, or 0.07 percentage point, to 12.32 percent at 11:03 a.m. in Sao Paulo. The real depreciated 0.2 percent to 2.3629 per U.S. dollar after rising yesterday to the strongest level this month.
“The market seems to be migrating toward a bet on a rate hike of 50 basis points,” Daniel Weeks, the chief economist at Garde Asset Management in Sao Paulo, said in a phone interview.
December 17, 2013
Ney Hayashi & Josue Leonel – Bloomberg, 12/17/2013
Brazil’s real climbed for a fourth straight day as the central bank’s plan for more intervention bolstering the currency in 2014 overshadowed concern that the U.S. Federal Reserve will begin curtailing stimulus.
The real appreciated 0.3 percent to 2.3208 per U.S. dollar at 11:17 a.m. in Sao Paulo. Swap rates on contracts maturing in January 2017 dropped one basis point, or 0.01 percentage point, to 11.96 percent.
Brazil’s central bank President Alexandre Tombini said on Dec. 10 that details of the currency program for 2014 will be announced this week. In the U.S., the Federal Reserve may start reducing asset purchases at its two-day policy meeting starting today, according to 34 percent of economists surveyed by Bloomberg on Dec. 6.
December 16, 2013
Blake Schmidt – Bloomberg, 12/16/2013
Brazil’s swap rates fell after economists cut their outlook for economic growth, adding to speculation that the world’s biggest increases in borrowing costs are approaching an end.
Swap rates on contracts maturing in 2015 dropped three basis points, or 0.03 percentage point, to 10.48 percent at 9:44 a.m. in Sao Paulo. The real appreciated 0.1 percent to 2.3281 per U.S. dollar.
Economists lowered their growth forecast for this year to 2.30 percent from 2.35 percent a week earlier, according to the median of about 100 estimates in a central bank survey published today. Policy makers have raised the target lending rate by 2.75 percentage points since April to 10 percent to curb inflation, the most among 49 central banks tracked by Bloomberg.
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.