Brazilian swap rates rose to a six- week high after analysts covering the economy increased their 2012 inflation forecast, bolstering speculation the central bank may limit its cycle of borrowing-cost cuts.
Swap rates on the contract due in January 2014 increased four basis points, or 0.04 percentage point, to 7.90 percent at 12:41 p.m. in Sao Paulo, the highest level on a closing basis since July 5.
The real dropped for the first time in four days, depreciating 0.2 percent to 2.0204 per dollar. The median 2012 inflation forecast of about 100 economists in a central bank survey published today increased for a sixth week, rising to 5.15 percent.
The economists reduced their growth forecast for this year to 1.75 percent even after recent signs that the economy may be picking up.
“The bigger the economic activity, the bigger the chance that the jump in food prices will pass through to inflation,” Vladimir Caramaschi, the chief economist of Credit Agricole SA’s Brazilian unit, said by phone from Sao Paulo.
Inflation accelerated in July for the first time in 10 months as adverse weather in Brazil and the U.S. drove up food prices.
The inflation rate as measured by the IPCA index rose to a four-month high of 5.20 percent, the national statistics agency reported Aug. 8.
Swap rates rose the most in almost three weeks on Aug. 16 after a report showed retail sales jumped 1.5 percent in June following a 0.8 percent drop in the prior month, adding to evidence that efforts to boost growth are starting to take hold.
Economists underestimated monthly retail sales the most since Bloomberg began compiling the data in 2008.
Economic Activity
The seasonally adjusted economic activity index, a proxy for gross domestic product, rose 0.75 percent in June, the fastest pace since March 2011, the central bank said Aug. 17.
The central bank has cut the target lending rate by 4.5 percentage points since August 2011 to a record low 8 percent to support growth.
President Dilma Rousseff’s administration has cut taxes on cars and appliances to revive growth in Latin America’s largest economy.
The second preview of the Getulio Vargas Foundation’s IGP-M index rose at a faster pace than forecast, according to a report today.
The gauge of producer and consumer prices and construction costs in the 20 days beginning July 21 increased 1.38 percent, compared with the 1.31 percent median forecast of 20 economists surveyed by Bloomberg.
The real declined against the dollar as German resistance to the European Central Bank’s plan to buy government bonds sparked concern leaders will fail to contain the region’s debt crisis, sapping demand for emerging-market assets.
“The real is very focused on the behavior of the external market,” Deives Ribeiro, the head of currency trading at Fair Corretora de Cambio e Valores, said by phone from Sao Paulo.
bloomberg.com
Swap rates on the contract due in January 2014 increased four basis points, or 0.04 percentage point, to 7.90 percent at 12:41 p.m. in Sao Paulo, the highest level on a closing basis since July 5.
The real dropped for the first time in four days, depreciating 0.2 percent to 2.0204 per dollar. The median 2012 inflation forecast of about 100 economists in a central bank survey published today increased for a sixth week, rising to 5.15 percent.
The economists reduced their growth forecast for this year to 1.75 percent even after recent signs that the economy may be picking up.
“The bigger the economic activity, the bigger the chance that the jump in food prices will pass through to inflation,” Vladimir Caramaschi, the chief economist of Credit Agricole SA’s Brazilian unit, said by phone from Sao Paulo.
Inflation accelerated in July for the first time in 10 months as adverse weather in Brazil and the U.S. drove up food prices.
The inflation rate as measured by the IPCA index rose to a four-month high of 5.20 percent, the national statistics agency reported Aug. 8.
Swap rates rose the most in almost three weeks on Aug. 16 after a report showed retail sales jumped 1.5 percent in June following a 0.8 percent drop in the prior month, adding to evidence that efforts to boost growth are starting to take hold.
Economists underestimated monthly retail sales the most since Bloomberg began compiling the data in 2008.
Economic Activity
The seasonally adjusted economic activity index, a proxy for gross domestic product, rose 0.75 percent in June, the fastest pace since March 2011, the central bank said Aug. 17.
The central bank has cut the target lending rate by 4.5 percentage points since August 2011 to a record low 8 percent to support growth.
President Dilma Rousseff’s administration has cut taxes on cars and appliances to revive growth in Latin America’s largest economy.
The second preview of the Getulio Vargas Foundation’s IGP-M index rose at a faster pace than forecast, according to a report today.
The gauge of producer and consumer prices and construction costs in the 20 days beginning July 21 increased 1.38 percent, compared with the 1.31 percent median forecast of 20 economists surveyed by Bloomberg.
The real declined against the dollar as German resistance to the European Central Bank’s plan to buy government bonds sparked concern leaders will fail to contain the region’s debt crisis, sapping demand for emerging-market assets.
“The real is very focused on the behavior of the external market,” Deives Ribeiro, the head of currency trading at Fair Corretora de Cambio e Valores, said by phone from Sao Paulo.
bloomberg.com
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