Brazil’s Real Falls on Moody’s Outlook as Rousseff Gains Support

September 10, 2014

Paula Sambo – Bloomberg, 9/9/2014

Brazil’s real dropped with bonds as Moody’s Investors Service lowered the nation’s credit rating outlook to negative and a poll showed increased support for President Dilma Rousseff during a recession.

The currency slid 0.8 percent to 2.2847 per dollar at the close of trade in Sao Paulo, the weakest since Aug. 25. Government bonds maturing in 2025 fell 1 cent to 101.84 cents on the dollar in the biggest decrease since March.

The real pared its rally in 2014 to 3.4 percent as Moody’s said in a statement that the nation’s low economic growth probably won’t improve in the short term. The currency dropped earlier today as a CNT/MDA poll showed that Rousseff would be tied in a runoff with Marina Silva, who led previous surveys.

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Brazil’s Real Tumbles on Concern Rousseff Is Picking Up Support

September 9, 2014

Paula Sambo – Bloomberg, 09/08/2014

Brazil’s real declined the most in emerging markets on speculation voter polls will show increased support for President Dilma Rousseff as she seeks re-election amid a recession and above-target inflation

The real fell 1.1 percent to 2.2675 per U.S. dollar at the close of trade in Sao Paulo, the biggest drop among 24 developing-nation currencies tracked by Bloomberg. Swap rates increased 21 basis points, or 0.21 percentage point, to 11.23 percent on the contract due in January 2020.

The same tracking polls that correctly predicted growing support for opposition candidate Marina Silva are now showing a slight decline in her support, according to a report today by newspaper Folha de Sao Paulo. A new poll by CNT/MDA may be released tomorrow and three others could be released this week. Speculation that Rousseff will lose her bid for re-election amid a faltering economy has helped to push the real up 4.2 percent in 2014, the most inemerging markets.

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Brazil Signals Key Rate on Hold Until Next Government Sworn In

September 4, 2014

David Biller and Raymond Colitt – Bloomberg, 09/03/2014

Brazil’s central bank signaled borrowing costs will remain unchanged until at least the end of the current administration in December as policy makers are trapped between a recession and above-target inflation.

The bank’s board, led by President Alexandre Tombini, yesterday held the benchmark rate at 11 percent for the third straight meeting, removing the phrase “at this moment” from the communique in an indication the key rate will remain on hold, Andre Perfeito, chief economist at Gradual Investimentos, said. All except one of the 54 analysts surveyed by Bloomberg correctly forecast the decision.

President Dilma Rousseff is trailing in polls as inflation near the ceiling of the target range has helped to erode consumer and business confidence. Yesterday’s monetary policy decision was the last before Brazilians select their leader in October. Marina Silva, who pledges to give the central bank president autonomy to bring inflation to the 4.5 percent target, would beat the incumbent in a runoff, polls show.

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Brazil Real Climbs as Polls Seen Showing More Support for Silva

September 3, 2014

Filipe Pacheco – Bloomberg, 09/02/2014

Brazil’s real rose amid speculation polls that may be released tomorrow will show more support for former Environment Minister Marina Silva in a runoff election against President Dilma Rousseff.

The real climbed 0.1 percent to 2.2436 per U.S. dollar. Swap rates on contracts maturing in January 2015 increased two basis points, or 0.02 percentage point, to 10.80 percent.

Speculation that Rousseff will lose her bid for re-election amid a faltering economy has helped to push the real up 5.3 percent in 2014, the most among 31 major currencies tracked by Bloomberg. A Datafolha poll published Aug. 29 showed Silva would have 50 percent of voter support in an October second-round vote against Rousseff, who would have 40 percent backing. The survey polled 2,874 people and had a margin of error of plus or minus two percentage points.

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Brazil’s Real Advances as Poll Shows Silva Would Win in Runoff

August 27, 2014

Paula Sambo – Bloomberg News, 8/27/2014

Brazil’s real rose to a one-week high as a poll showed that Marina Silva, who pledges to slow inflation and support autonomy for the central bank, would defeat President Dilma Rousseff in an election runoff.

The currency climbed 0.3 percent to 2.2545 per U.S. dollar at 10:07 a.m. in Sao Paulo, the strongest on a closing basis since Aug. 19. Swap rates, a gauge of expectations for interest-rate moves, fell four basis points, or 0.04 percentage point, to 11.37 percent on the contract maturing in January 2018.

The real has rallied 4.6 percent this year, the most among 24 emerging-market currencies, on speculation Rousseff is losing popularity after overseeing the slowest economic growth in two decades. The president would garner 36 percent in a runoff vote compared with 45 percent for former Environment Minister Silva, according to an Aug. 23-25 Ibope poll of 2,506 people published yesterday after the close of markets.

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Brazil’s Oi posts loss; debt soars with Portugal Telecom

August 6, 2014

Brad Haynes and Guillermo Parra-Bernal – Reuters, 8/6/2014

Grupo Oi SA, Brazil’s biggest fixed-line telecommunications operator, posted a second-quarter net loss on Wednesday, as revenue stagnated and payroll and debt-servicing costs rose amid a troubled merger with its largest shareholder.

The company posted a quarterly loss of 221 million reais ($97 million), its first results since combining assets with Portugal Telecom SGPS SA in April. The result was larger than the combined shortfall of 124 million reais the companies would have posted together a year ago, according to a securities filing.

Revenue in Brazil slipped 2 percent from a year earlier to 6.94 billion reais. Revenue from Portugal fell 3.4 percent in euros, but a currency swing boosted results in Brazilian reais by nearly 10 percent. As a result total revenue was little changed at 9.02 billion reais.

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Brazilian Real Weakens to Two-Month Low on Fed Tapering Concern

August 5, 2014

Filipe Pacheco – Bloomberg Businessweek, 8/5/2014

Brazil’s real declined to a two-month low on speculation that evidence of U.S. economic strength will spur the Federal Reserve to begin raising borrowing costs faster than expected.

The real fell 0.7 percent to 2.2746 per dollar at 11:54 a.m. in Sao Paulo, the weakest on a closing basis since June 4. The drop was the biggest among 16 major currencies tracked by Bloomberg after South Africa’s rand. Swap rates, a gauge of expectations for interest-rate moves, increased 17 basis points, or 0.17 percentage point, to 11.76 percent on contracts maturing in January 2017.

“Stronger numbers are coming from the U.S. economy, and any indication that monetary policy may change there before markets expected brings concern to emerging-market investors, and the currency is impacted,” Sidnei Nehme, executive director at NGO Corretora in Sao Paulo, said in a telephone interview. “The real tends to trade closer to 2.30 per dollar for now than toward the 2.25 level.”

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