Brazil’s real extends slide despite intervention

 Asher Levine and Bruno Federowsk – Reuters, 9/29/2015

Brazil’s real extended its decline into a third session on Tuesday as traders, concerned about the outlook for commodities prices and local growth, shrugged off the central bank’s efforts to boost the battered currency.

Other currencies in the region were little changed, while stocks moved slightly higher. The real strengthened at the open following the central bank’s announcement after Monday’s close that it would sell up to $2 billion in the spot market on Tuesday with repurchase agreements and hold an unscheduled currency swap auction. Still, the real remained near its weakest level on record,
hovering near 4.13 per dollar.

“It seems that the Brazilian currency market is nolonger accepting ‘more of the same’ when it comes to central bank auctions and is testing the bank for something stronger,” Jefferson Luiz Rugik, a trader with Brazilian brokerage Correparti, wrote in a client note.

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Brazil stock traders recoil at Volpon’s rate call as real climbs

Denyse Godoy, Paula Sambo, and Filipe Pacheco – Bloomberg Business, 7/21/2015

Brazilian shares dropped to an almost four-month low on speculation borrowing costs at Latin America’s largest economy will increase further, curbing prospects for equities. The real advanced for the first time in four days.

The Ibovespa extended this month’s slump after central bank director Tony Volpon said policy makers should keep raising interest rates until the outlook for inflation reaches the government’s target. The benchmark stock gauge has tumbled 11 percent from this year’s peak on concern the decision to boost the Selic to a six-year high to tame consumer prices will deepen an economic contraction.

“The central bank will probably increase rates again next week in a trend that’s damaging the economy and prospects for companies,” Pedro Paulo Silveira, the chief economist at brokerage TOV Corretora, said by phone from Sao Paulo.

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Brazil economy still faltering, with GDP contraction on par with Russia’s

Kenneth Rapoza – Forbes, 6/19/2015

Brazil’s economy is grinding to the bottom. But the bottom doesn’t appear to have been hit just yet.

The monthly GDP proxy at the Central Bank of Brazil, known as the IBC-Br index, surprised on the downside on Friday by falling 0.84% in April. That’s from a downwardly revised -1.51% decline in the previous month and is now compatible with a yearly drop of 3.13%.

Putting this into perspective, Brazil’s BRIC counterpart Russia is expected to contract 3.25% this year and its economy is facing weaker oil prices and sanctions against its oil and finance companies. Brazil is moving in line with a sanctioned economy that is over dependent on one commodity, while Brazil has good relations with the world and a much more diverse economy.

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Brazil contracts more than expected in April

Financial Times, 6/19/2015

Brazil’s first quarter contraction was bad. But the second quarter is shaping up to be even worse.

The Brazilian central bank’s IBC-Br index, a preliminary indicator of GDP growth, showed that Latin America’s largest economy contracted for the sixth time in the past seven months.

Economic activity fell 0.8 per cent in April from March as successive interest rate hikes and the austerity measures implemented by Joaquim Levy, Brazil’s new market-friendly finance minister, take their toll on the economy.

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Brazil Central Bank reduces rollover pace of currency swaps again

Stephen Eisenhammer – Reuters, 6/17/2015

Brazil’s central bank decided on Wednesday to reduce again the rollover pace of currency swaps that mature early next month, a move that is likely to weigh on the Brazilian real.

The bank said in a statement that it would auction on Thursday as many as 5,200 currency swaps to roll over similar contracts that mature on July 1.

Last week, the bank cut its offering to 6,300 from 7,000 contracts per day.

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Brazil freezes $13.7 billion from budget to meet fiscal goal

Maria Luiza Rabello, Matthew Malinowski – Bloomberg, 05/22/2013

Brazil’s government has frozen 28 billion reais ($13.7 billion) in its 2013 budget as it tries to meet its primary surplus target, Finance Minister Guido Mantega said.

Officials did not freeze portions of the budget set aside for investments and hosting the World Cup soccer tournament, Mantega told reporters today in Brasilia. The government may increase abatements against this year’s fiscal surplus goal to 45 billion reais, Mantega said, up from February’s estimate of 25 billion reais.

President Dilma Rousseff’s administration this year is seeking to meet Brazil’s primary surplus goal of 155.9 billion reais without undermining economic growth. Authorities have extended tax cuts and increased spending to spur the economy, even as such measures have helped keep annual inflation near the 6.5 percent upper limit of the central bank’s target range.

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Brazil real stronger in thin volume, with Central Bank absent

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.

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