Brazil’s real led gains among global major currencies on speculation that President Dilma Rousseff will appoint a finance minister capable of restoring growth to Latin America’s largest economy.
The real strengthened 0.6 percent to 2.5301 per dollar at the close of trade in Sao Paulo, the most among 16 world counterparts. Swap rates, a gauge of expectations for changes in borrowing costs, fell 0.05 percentage point to 12.17 percent on the contract maturing in January 2017.
The currency gained as a government official familiar with the situation said former Treasury Secretary Joaquim Levy will be nominated to replace Finance Minister Guido Mantega as soon as Nov. 27. Levy, the head of Bradesco Asset Management, helped implement fiscal changes under Rousseff’s predecessor, Luiz Inacio Lula da Silva.
“Investors are expecting the new team to come up with a plan focused on improving the economy in the short term,” Paulo Nepomuceno, the chief economist at Coinvalores CCVM in Sao Paulo, said in a telephone interview.
“The names speculated on so far are considered market-friendly.” Former Deputy Finance Minister Nelson Barbosa will replace Miriam Belchior as the head of the planning and budget ministry, while Alexandre Tombini will remain as the central bank president, said the official, who asked not to be identified because discussions aren’t public.
The administration faces the challenge of reviving growth after Brazil slipped into a recession in the first half of the year. The president’s press office declined yesterday to comment on cabinet changes.
Implied Volatility
One-month implied volatility on options for the real, reflecting projected shifts in the exchange rate, remained the highest among major currencies.
Brazil’s deficit in the current account, the broadest measure of trade in goods and services, widened in October to $8.1 billion from $7.9 billion in the previous month, the central bank reported yesterday.
Standard & Poor’s lowered Brazil’s credit rating in March for the first time in more than a decade to the lowest level of investment grade, citing slower growth as well as deteriorating fiscal accounts.
To support the currency, Brazil sold the equivalent of $197.4 million of foreign-exchange swaps today as part of an intervention program begun last year and rolled over contracts worth $683 million.
bloomberg.com
The real strengthened 0.6 percent to 2.5301 per dollar at the close of trade in Sao Paulo, the most among 16 world counterparts. Swap rates, a gauge of expectations for changes in borrowing costs, fell 0.05 percentage point to 12.17 percent on the contract maturing in January 2017.
The currency gained as a government official familiar with the situation said former Treasury Secretary Joaquim Levy will be nominated to replace Finance Minister Guido Mantega as soon as Nov. 27. Levy, the head of Bradesco Asset Management, helped implement fiscal changes under Rousseff’s predecessor, Luiz Inacio Lula da Silva.
“Investors are expecting the new team to come up with a plan focused on improving the economy in the short term,” Paulo Nepomuceno, the chief economist at Coinvalores CCVM in Sao Paulo, said in a telephone interview.
“The names speculated on so far are considered market-friendly.” Former Deputy Finance Minister Nelson Barbosa will replace Miriam Belchior as the head of the planning and budget ministry, while Alexandre Tombini will remain as the central bank president, said the official, who asked not to be identified because discussions aren’t public.
The administration faces the challenge of reviving growth after Brazil slipped into a recession in the first half of the year. The president’s press office declined yesterday to comment on cabinet changes.
Implied Volatility
One-month implied volatility on options for the real, reflecting projected shifts in the exchange rate, remained the highest among major currencies.
Brazil’s deficit in the current account, the broadest measure of trade in goods and services, widened in October to $8.1 billion from $7.9 billion in the previous month, the central bank reported yesterday.
Standard & Poor’s lowered Brazil’s credit rating in March for the first time in more than a decade to the lowest level of investment grade, citing slower growth as well as deteriorating fiscal accounts.
To support the currency, Brazil sold the equivalent of $197.4 million of foreign-exchange swaps today as part of an intervention program begun last year and rolled over contracts worth $683 million.
bloomberg.com
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