Brazil’s longer-term swap rates fell to a 12-month low as economists cut this year’s growth forecast after the country entered a recession, adding to speculation the central bank will limit further increases in borrowing costs.
Swap rates on contracts maturing in January 2018 dropped seven basis points, or 0.07 percentage point, to 11.18 percent at 2:24 p.m. in Sao Paulo, the lowest level since August 2013.
The real was little changed at 2.2376 per U.S. dollar. Economists pared their forecast for 2014 gross domestic product expansion to 0.52 percent in a 14th straight weekly reduction, according to the median of about 100 estimates in a central bank survey published today.
Policy makers will leave the target lending rate unchanged for a third consecutive time on Sept. 3, the median forecast in a Bloomberg survey indicates. They lifted the benchmark by 3.75 percentage points to 11 percent in the year through April to curb inflation.
“There is no expectation that the economy will pick up in the second half,” Camila Abdelmalack, an economist at CM Capital Markets in Sao Paulo, said in a telephone interview. “We should see a continuity of bad numbers regarding growth.”
Swap rates dropped on Aug. 29 after the government reported that Brazil slipped into a recession for the first time since the 2009 financial crisis.
GDP shrank by 0.6 percent in the April-June period from the previous three months after contracting a revised 0.2 percent in the first quarter, the national statistics agency reported.
Rousseff Outlook
Speculation that President Dilma Rousseff will lose her bid for re-election amid a faltering economy has helped to push the real up 5.6 percent in 2014, the most among 31 major currencies tracked by Bloomberg.
A Datafolha poll published Aug. 29 after markets were closed showed Marina Silva will probably beat Rousseff in a runoff election. Silva would have 50 percent of voter support in an October second-round vote against Rousseff, who would have 40 percent backing, according to an Aug. 28-29 poll.
The poll surveyed 2,874 people and had a margin of error of plus or minus two percentage points. Silva became the candidate for the Brazilian Socialist Party after former Pernambuco Governor Eduardo Campos was killed in an Aug. 13 plane crash.
She pledged on Aug. 29 that her administration would grant the central bank president a fixed term as quickly as possible to increasing the institution’s independence.
To support the real and limit import price increases, Brazil sold foreign-exchange swaps worth $197.8 million as part of an intervention program.
bloomberg.com
Swap rates on contracts maturing in January 2018 dropped seven basis points, or 0.07 percentage point, to 11.18 percent at 2:24 p.m. in Sao Paulo, the lowest level since August 2013.
The real was little changed at 2.2376 per U.S. dollar. Economists pared their forecast for 2014 gross domestic product expansion to 0.52 percent in a 14th straight weekly reduction, according to the median of about 100 estimates in a central bank survey published today.
Policy makers will leave the target lending rate unchanged for a third consecutive time on Sept. 3, the median forecast in a Bloomberg survey indicates. They lifted the benchmark by 3.75 percentage points to 11 percent in the year through April to curb inflation.
“There is no expectation that the economy will pick up in the second half,” Camila Abdelmalack, an economist at CM Capital Markets in Sao Paulo, said in a telephone interview. “We should see a continuity of bad numbers regarding growth.”
Swap rates dropped on Aug. 29 after the government reported that Brazil slipped into a recession for the first time since the 2009 financial crisis.
GDP shrank by 0.6 percent in the April-June period from the previous three months after contracting a revised 0.2 percent in the first quarter, the national statistics agency reported.
Rousseff Outlook
Speculation that President Dilma Rousseff will lose her bid for re-election amid a faltering economy has helped to push the real up 5.6 percent in 2014, the most among 31 major currencies tracked by Bloomberg.
A Datafolha poll published Aug. 29 after markets were closed showed Marina Silva will probably beat Rousseff in a runoff election. Silva would have 50 percent of voter support in an October second-round vote against Rousseff, who would have 40 percent backing, according to an Aug. 28-29 poll.
The poll surveyed 2,874 people and had a margin of error of plus or minus two percentage points. Silva became the candidate for the Brazilian Socialist Party after former Pernambuco Governor Eduardo Campos was killed in an Aug. 13 plane crash.
She pledged on Aug. 29 that her administration would grant the central bank president a fixed term as quickly as possible to increasing the institution’s independence.
To support the real and limit import price increases, Brazil sold foreign-exchange swaps worth $197.8 million as part of an intervention program.
bloomberg.com
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