Brazil’s Real Falls as Ukraine Turmoil Saps Emerging-Market Bid

July 29, 2014

Paula Sambo and Filipe Pacheco – Bloomberg Businessweek, 7/29/2014

Brazil’s real dropped the most among major Latin American currencies as turmoil in Ukraine dried up demand for emerging-market assets.

The real declined 0.2 percent to 2.2279 per U.S. dollar at 9:42 a.m. in Sao Paulo. Swap rates, a gauge of expectations for interest-rate moves, increased six basis points, or 0.06 percentage point, to 11.33 percent on the contract maturing in January 2017.

Investors sought refuge in the dollar as the European Union and the U.S. prepared new sanctions against Russia while President Vladimir Putin’s administration formulated its response to international pressure over the conflict in Ukraine.

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Brazil to boost credit to counter economic slowdown

July 25, 2014

Walter Brandimarte – Reuters, 7/25/2014

Brazil’s central bank on Friday announced measures to boost credit in the country’s ailing economy, one week after keeping its benchmark interest rate at its highest level in over two years to fight inflation.

The bank said in a statement it was freeing up an estimated 30 billion reais ($13.5 billion) in the financial system through changes to banks’ reserve requirements.

The move “aims at improving the distribution of liquidity in the economy” given a recent slowdown in credit and relatively low levels of bad loans, the bank said.

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Brazil set to hold interest rates, signal long pause

July 16, 2014

Alonso Soto – Reuters, 7/16/2014

Brazil will likely keep interest rates steady for the second straight time on Wednesday and signal it will leave them there for some time even after inflation hit the ceiling of its target range.

At its last meeting on May 28, the central bank’s monetary policy committee halted its year-long rate-hiking campaign and held its benchmark Selic rate at 11 percent to give a respite to an economy that is again flirting with recession.

Disappointing growth data will likely keep the central bank, led by Alexandre Tombini, from raising interest rates for the rest of 2014 even though inflation is expected to stay high for the next two years.

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Brazil Central Bank puts inflation at center of concerns

March 14, 2013

Tom Murphy & Rogerio Jelmayer – Fox Business/Dow Jones Newswires, 02/14/2013

The central bank revealed much of its thinking in minutes released Thursday from its March 6 monetary-policy meeting. At the meeting, the central bank held its Selic base interest rate steady at an all-time low of 7.25%. But a brief statement after the meeting hinted at possible data-based interest rate hikes in the near term.

The minutes of the meeting showed a striking level of concern for continued inflationary pressures.

The minutes stated that Brazil’s inflation problem can no longer be viewed “as a temporary condition.” The minutes said that inflation has proven resilient and may have reached “a new, and higher plateau.”

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Brazil central bank cuts growth lower inflation

December 20, 2012

Silvio Cascione, Luciana Otoni – Reuters, 12/20/2012

Brazil’s central bank acknowledged on Thursday that the economy will grow very little in 2012 and reinforced the case for a long period of low interest rates by forecasting that inflation should ease next year.

The bank lowered its 2012 economic growth forecast to 1.0 percent from 1.6 percent previously, matching market estimates, according to its latest quarterly inflation report.

The bank also lowered its 2013 inflation forecast to 4.8 percent from 4.9 percent previously, contrasting with market forecasts projecting inflation at 5.42 percent.

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Brazil swap rates drop on Rousseff comment; real little changed

December 12, 2012

Blake Schmidt – Bloomberg, 12/12/12

Brazil’s swap rates fell for the first time in four days as comments from President Dilma Rousseff encouraged speculation that policy makers will keep borrowing costs at record lows through the first half of 2013.

Interest rates are on track to converge with international levels, Rousseff said in a meeting with business leaders in Paris, adding that Brazil needs to reduce the cost of capital.

Swap rates on the contract due in January 2016 decreased six basis points, or 0.06 percentage point, to 8.16 percent at 1:29 p.m. in Sao Paulo. The real was little changed at 2.0805 after closing on Dec. 7 at 2.0751, the strongest since Nov. 14.

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Brazil’s central bank will raise rates next year, if needed – source

September 18, 2012

Luciana Magalhaes – The Wall Street Journal, 09/18/2012

Brazil’s central bank doesn’t rule out raising its baseline interest rate in 2013 if necessary, to keep inflation within its target range, a person close to the central bank said Tuesday.

“We have an inflation targeting policy. If it becomes necessary, the central bank will raise rates in 2013 to keep the inflation in the target,” said the person, who asked not to be named.

While Brazil’s central bank has most recently been cutting interest rates, many market players are betting that the central bank will have to raise rates in 2013 to tame inflation. But top finance ministry officials have sought to play down any need for rate hikes next year.

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