Brazil’s Real Drops to Seven-Month Low as Silva’s Support Falls

September 19, 2014

Paula Sambo – Bloomberg, 9/19/2014

Brazil’s real fell to a seven-month low as a voter poll showed a drop in voter support for Marina Silva as President Dilma Rousseff defended her economic and fiscal policies before the October election.

The real dropped 0.4 percent to 2.3732 per U.S. dollar at 2:36 p.m. in Sao Paulo, extending this week’s decline to 1.5 percent, the biggest among 16 major currencies tracked by Bloomberg. Swap rates, a gauge of expectations for changes in borrowing costs, increased seven basis points, or 0.07 percentage point, to 11.70 percent on the contract due in January 2016 as a report showed inflation accelerated. They were up nine basis points since Sept. 12.

“Markets are not pleased with Rousseff gaining support,” Joao Paulo de Gracia Correa, a trader at Correparti Corretora de Cambio in Curitiba, Brazil, said in a telephone interview.

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Brazil’s Swap Rates Decline After Economy Contracted in June

August 15, 2014

Filipe Pacheco – Bloomberg, 8/15/2014

Brazil’s swap rates fell after data showed the economy shrank in June by the most in 13 months, adding to speculation policy makers will limit further increases in borrowing costs.

Swap rates on contracts maturing in January 2017, a gauge of expectations for interest rates, dropped six basis points, or 0.06 percentage point, to 11.54 percent at 9:20 a.m. in Sao Paulo, and were down 12 basis points this week. The real climbed 0.2 percent to 2.2622 per dollar, extending the advance this week to 0.9 percent.

Brazil’s seasonally-adjusted economic activity index fell 1.48 percent in June from the previous month, the central bank said in a report posted on its website today, the biggest drop since May 2013. President Dilma Rousseff is struggling to revive Brazil’s faltering economy, which is forecast by analysts to grow at the slowest pace since 2009, two months ahead of presidential elections.

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Brazil’s Swap Rates Decline Before Today’s Central Bank Decision

July 16, 2014

Filipe Pacheco – Bloomberg, 7/16/2014

Brazil’s swap rates dropped to an eight-month low as a report showing deflation added to speculation the central bank will signal today that it will limit further increases in borrowing costs.

Swap rates on the contract maturing in January 2017 decreased three basis points, or 0.03 percentage point, to 11.38 percent at 10:02 a.m. in Sao Paulo, the lowest level on a closing basis since Oct. 30. The real was little changed at 2.2179 per U.S. dollar.

The Getulio Vargas Foundation reported today that producer, construction and consumer prices fell 0.56 percent in the month through July 10, more than the 0.50 decrease forecast by economists surveyed by Bloomberg. A slowing economy spurred the central bank to hold its target lending rate at 11 percent on May 28 after nine consecutive increases to curb inflation.

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Brazil’s Real weakens as Central Bank reduces rollover offering

May 5, 2014

Filipe Pacheco – Bloomberg, 5/5/2014

Brazil’s real fell the most among major dollar counterparts after the central bank reduced the volume of foreign-exchange swap contracts that it offered to roll over, signaling eased support for the currency.

The real dropped 0.9 percent to 2.2407 per U.S. dollar at 3:16 p.m. in Sao Paulo, the lowest level on a closing basis since April 25. The currency posted the biggest decline among 16 major currencies tracked by Bloomberg.

The central bank rolled over in an offering all 5,000 of currency swap contracts due June 2 and worth $247.1 million today, compared with 10,000 available in April auctions. To support the currency and limit import price increases, Brazil also sold $198.4 million of foreign-exchange swaps.

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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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