Brazil’s real advanced for the first time in four days on speculation opposition candidate Aecio Neves’s performance in a presidential debate yesterday will give him momentum as the election runoff approaches.
The real climbed 1.5 percent to 2.4354 per dollar, paring this week’s decrease to 0.3 percent. Swap rates, a gauge of expectations for changes in local borrowing costs, dropped fourteen basis points, or 0.14 percentage point, to 11.98 percent on the contract due in January 2017. They are up five basis points since Oct. 10.
“Financial markets think Neves won yesterday’s debate, and this could translate into more votes for him,” Joao Paulo de Gracia Correa, a trader at Correparti Corretora de Cambio in Curitiba, Brazil, said by telephone.
“With the candidates tied in the polls, anything can influence the markets.”
Projected swings between currency gains and losses have heightened before the Oct. 26 election runoff, with one-month implied volatility on options for the real the highest among developing nations.
The real fell yesterday to a two-week low after voter poll results indicating a statistical tie between Neves and President Dilma Rousseff damped the prospect of a new government reviving the nation’s economy.
Neves and President Dilma Rousseff clashed in yesterday’s debate on the economy, corruption, security and education. The candidates brought up each others’ families, trading accusations of nepotism.
The challenger said Brazil’s policies have led to accelerating inflation, weak growth and declining investments. Rousseff said Neves’s measures to damp consumer price increases would triple the unemployment rate.
Neves has 45 percent support and Rousseff 43 percent in the runoff, according to separate polls published by Ibope and Datafolha published Oct. 15.
Both have a margin of error of plus or minus two percentage points. To support the currency, Brazil sold $197.6 million of foreign-exchange swaps as part of an intervention program and rolled over contracts worth $393.7 million.
bloomberg.com
The real climbed 1.5 percent to 2.4354 per dollar, paring this week’s decrease to 0.3 percent. Swap rates, a gauge of expectations for changes in local borrowing costs, dropped fourteen basis points, or 0.14 percentage point, to 11.98 percent on the contract due in January 2017. They are up five basis points since Oct. 10.
“Financial markets think Neves won yesterday’s debate, and this could translate into more votes for him,” Joao Paulo de Gracia Correa, a trader at Correparti Corretora de Cambio in Curitiba, Brazil, said by telephone.
“With the candidates tied in the polls, anything can influence the markets.”
Projected swings between currency gains and losses have heightened before the Oct. 26 election runoff, with one-month implied volatility on options for the real the highest among developing nations.
The real fell yesterday to a two-week low after voter poll results indicating a statistical tie between Neves and President Dilma Rousseff damped the prospect of a new government reviving the nation’s economy.
Neves and President Dilma Rousseff clashed in yesterday’s debate on the economy, corruption, security and education. The candidates brought up each others’ families, trading accusations of nepotism.
The challenger said Brazil’s policies have led to accelerating inflation, weak growth and declining investments. Rousseff said Neves’s measures to damp consumer price increases would triple the unemployment rate.
Neves has 45 percent support and Rousseff 43 percent in the runoff, according to separate polls published by Ibope and Datafolha published Oct. 15.
Both have a margin of error of plus or minus two percentage points. To support the currency, Brazil sold $197.6 million of foreign-exchange swaps as part of an intervention program and rolled over contracts worth $393.7 million.
bloomberg.com
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