Brazil’s swap rates rise with currency as inflation accelerates

April 1, 2014

Filipe Pacheco – Bloomberg, 4/1/2014

Brazil’s swap rates climbed as a report showed inflation unexpectedly accelerated in the nation’s biggest cities, adding to speculation that the central bank will keep raising borrowing costs.

Swap rates on contracts maturing in January 2017 increased eight basis points, or 0.08 percentage point, to 12.55 percent at 9:49 a.m. in Sao Paulo. The real appreciated 0.5 percent to 2.2605 per U.S. dollar.

The Getulio Vargas Foundation reported today that consumer prices in Brazil’s seven biggest cities rose 0.85 percent in the 30 days ended March 31 compared with 0.83 percent in the prior period. The median forecast of economists surveyed by Bloomberg was for a 0.82 percent increase. Swap rates indicated that traders project that policy makers will lift the target lending rate by a quarter-percentage point to 11 percent tomorrow.

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Brazil’s swap rates decline as food inflation slows; real falls

March 12, 2014

Filipe Pacheco – Bloomberg Businessweek, 3/12/2014

Brazil’s shorter-term swap rates dropped as a report showed food and beverage prices rose at a slower pace in February, adding to speculation that the central bank will limit further increases in borrowing costs.

Swap rates on contracts maturing in January 2016 fell six basis points, or 0.06 percentage point, to 12.05 percent at 12:08 p.m. in Sao Paulo. The real depreciated 0.1 percent to 2.3665 per U.S. dollar.

The national statistics agency reported today that food and beverage prices climbed 0.56 percent in February after increasing 0.84 percent in the prior month. To curb inflation, policy makers lifted the target lending rate at their meeting last month by 25 basis points to 10.75 percent, half the pace of the previous six decisions.

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Brazil swap rates fall before Central Bank decision: Real slips

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.

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Brazil swap rates rise on drought concern as currency declines

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.

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Brazil swap rates rise on Tombini inflation pledge; Real falls

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.

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Brazil swap rates rise as central bankers convene: Real declines

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.

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Brazil Real rises as intervention plan overshadows Fed concern

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.

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Brazil swap rates drop economic growth outlook: Real climbs

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.

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Brazil says current pace of rate increases remains adequate

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.

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Brazil swap rates surge on Tombini inflation view; Real tumbles

November 5, 2013

Blake Schmidt & Josue Leonel – Bloomberg, 11/05/2013

Brazilian swap rates climbed to a two-year high after central bank President Alexandre Tombini said policy makers must be “especially vigilant” on inflation.

Swap rates on contracts maturing in January 2016 increased 19 basis points, or 0.19 percentage point, to 11.58 percent at 1:35 p.m. in Sao Paulo on speculation Brazil will increase its target lending rate to 10 percent this month. The swap rates reached the highest level on a closing basis since September 2011. The real depreciated 1.8 percent to a two-month low of 2.2874 per dollar on concern the government budget deficit will lead to a reduced credit rating. The drop was the biggest among emerging-market currencies tracked by Bloomberg.

Tombini said yesterday in Fortaleza, Brazil, that high inflation reduces the potential for economic growth and the generation of jobs and income. After the central bank raised borrowing costs this year more than any other country, consumer prices rose at an annual pace of 5.75 percent through mid-October, still higher than target.

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