May 3, 2013
Paul Kiernan – The Wall Street Journal, 05/02/2013
Brazil’s real closed moderately weaker against the dollar Thursday, likely influenced by financial and trade-related flows as well as a sharp decline in the euro after comments by Europe’s top central banker.
The real exited active trading at BRL2.0094 to the dollar, according to Tullett Prebon via FactSet, compared with Tuesday’s close of BRL1.9996. Brazilian financial markets were closed Wednesday for the country’s Labor Day holiday.
The euro, which Brazil’s currency sometimes tracks, lost around 1% of its value against the greenback after European Central Bank President Mario Draghideclined to rule out the possibility of cutting an interest rate on overnight deposits below zero. Implementing negative interest rates would be intended to encourage banks to lend or invest rather than leaving their extra cash at the ECB.
March 14, 2013
Joseph Ciolli & Ye Xie – Bloomberg, 03/14/2013
Efforts by Brazil to tame inflation are providing foreign-exchange traders with the biggest returns in the world by purchasing reais with funds borrowed in dollars.
Investing in real forward contracts funded by the greenback has gained 5.3 percent this year, the most of any of the 44 other currencies tracked by Bloomberg. Wagers that Brazil’s currency will rise outpaced those expecting a decline by an average of $5.6 billion this year, data from the Sao Paulo-based BM&F exchange and compiled by Bloomberg show. As recently as September there were net bets against the real.
Finance Minister Guido Mantega, who popularized the term “currency war” in 2010, told Bloomberg News last month he’s abandoning the strategy that drove the real down 19 percent in two years as the government shifts its focus to containing inflation. The central bank signaled on March 6 that it’s ready to raise interest rates from a record low 7.25 percent after dropping a pledge to hold borrowing costs steady for what it had called “a prolonged period of time.”
February 27, 2013
Jeff Fick – The Wall Street Journal, 02/27/2013
Brazil’s real closed stronger against the U.S. dollar Wednesday as concerns about local inflation and Italy’s political uncertainties faded.
The real exited active trading Friday at BRL1.9722 to the U.S. dollar, stronger than Tuesday’s closing price fixed at BRL1.9829, according to Tullett Prebon via FactSet.
Brazil’s currency tracked gains by the euro, seen as a key barometer for the real, as global markets rebounded from this week’s selloff on inconclusive results from the Italian elections. Investor appetite for riskier assets such as emerging-market currencies recovered after Italy successfully sold about $8.5 billion of bonds, although at the highest yields since October 2012.
February 13, 2013
Tom Murphy – The Wall Street Journal, 13/02/2013
SAO PAULO–The Brazilian real ended active trading Wednesday slightly stronger against the Friday close in thin post-holiday volume.
The real ended active trading at BRL1.9642 to the dollar, stronger from the Friday close of BRL1.9698, according to Tullett Prebon via FactSet. Brazilian markets were closed Monday and Tuesday for the annual Carnival festivities.
Traders said there was little pressure from either side of the market Wednesday, with the real drifting to a stronger position on U.S. dollar inflows from foreign investors, mainly in Brazilian stocks, and from overseas bond issues by Brazilian companies.
February 8, 2013
Alonso Soto and Luciana Otoni – Reuters, 02/08/2013
Brazilian Finance Minister Guido Mantega told Reuters European countries should focus on reviving their economies with more investments, rather than trying to weaken the euro to protects jobs as France has suggested ahead of next week’s meeting of G20 economic powers.
“We will continue to have this currency problem unless the global economy takes off,” Mantega said in an interview late Thursday. “The solution here is to make their economies more dynamic and jolt them out of stagnation.”
More than two years ago Mantega used the term “currency wars” to describe the series of competitive devaluations adopted by rich nations to bolster their exports amid the global slowdown to the detriment of emerging market nations.
February 7, 2013
Blake Schmidt, Marisa Castellani – Bloomberg, 02/07/2013
Brazil’s real rallied the most among emerging-market currencies as the central bank said high inflation requires attention, spurring speculation that policy makers will let the currency strengthen to contain prices.
Swap rates climbed after the government reported that consumer prices increased in January at the fastest pace in almost eight years, adding to bets on a boost in borrowing costs. The exchange rate and tax cuts will help slow inflation, a central bank board member said in a phone interview, asking not to be identified because of internal policy.
“Higher inflation shoots the real up,” Joao Paulo de Gracia Correa, currency manager at Correparti Corretora, said in a phone interview from Curitiba, Brazil.
February 7, 2013
Jeff Fick – The Wall Street Journal, 02/07/2013
–Rolling 12-month inflation rate at 6.15% in January, above government target
–Global currency markets also await comments from ECB President Mario Draghi
–Brazilian real opens at BRL1.9874, weaker from Wednesday’s close at BRL1.9861
The Brazilian real opened slightly weaker against the U.S. dollar Thursday as inflation in Latin America’s largest economy posted its strongest advance in nearly eight years in January, although reaction is expected to be muted as the country prepares for the Carnival holiday.
The local currency failed to track overseas gains by the euro, seen as a key barometer for the real, ahead of a meeting of the European Central Bank and much-anticipated comments by ECB President Mario Draghi. The real opened trading at BRL1.9874 to the dollar, weaker from Wednesday’s closing price fix at BRL1.9861, according to Tullett Prebon via FactSet.
January 30, 2013
Raymond Colitt & Matthew Malinowski – Bloomberg, 01/30/2013
Brazil’s government is ready to prevent the exchange rate from having exaggerated gains, Finance Minister Guido Mantega said today, after the real this week strengthened to beyond 2 per dollar for the first time since July.
The real shouldn’t be used as a tool to reduce prices, and a weaker currency helps make domestic industry more competitive, Mantega said.
Brazil’s exchange rate had the third-biggest gain amid major currencies this year as traders anticipated the central bank would allow the real to strengthen in a bid to tame consumer prices. Today, after Mantega said the policy adopted since 2010 of keeping the currency weaker isn’t changing, the real reverted earlier gains and dropped.
January 29, 2013
Luciana Otoni – Reuters, 01/29/2013
Brazilian policymakers have allowed the real to strengthen past the 2-per-dollar mark as part of a strategy to cheapen imported capital goods and boost much-needed investment in industry, a source at the Finance Ministry said on Tuesday.
A second source on President Dilma Rousseff’s economic team stressed that the government will not allow the currency to appreciate too rapidly against the dollar nor to return to levels seen early last year, when the real at 1.7 per dollar posed a threat to Brazilian exporters.
Both sources spoke on condition of anonymity.
The Finance Ministry source downplayed the impact of the strengthening currency on inflation.
October 11, 2012
Matthew Bristow – Bloomberg, 10/10/2012
The Brazilian real is well-placed to resist the latest round of U.S. monetary stimulus due to “lines of defense” erected by the government, Finance Minister Guido Mantega said.
The currency won’t strengthen as much in response to the U.S. Federal Reserve’s third round of quantitative easing, or QE3, as it did during the first two rounds, due to a tax on financial transactions known as the IOF, and the country’s record-low interest rates, Mantega said.
“Gradually, there will be an entry of dollars,” Mantega said in an interview in Tokyo, where he is attending a meeting of the International Monetary Fund. “I don’t think that a lot will enter, because the Brazilian economy is protected, defended, with measures such as the IOF.”