Brazil’s Real Plunges on Dim Economic Forecasts

0
178

RealThe Brazil’s real dropped from its highest level in one month after economists polled by the central bank trimmed their economic growth estimates.

The real plunged 0.3 percent to trade at 2.6397 per dollar as of 9:42 a.m. Sao Paulo time. Swap rates, which track expectations of swings in interest rates, plunged 0.02 percentage points to steady at 12.46 percent for the contract that matures in January 2017.

Economists lowered their growth estimates this year to 0.4 percent, compared with 0.5 percent earlier.

“Investors are very sensitive because we have all this negative economic data day after day,” Reginaldo Siaca, a Sao Paulo-based currency manager at Tov Corretora de Cambio, told Bloomberg News. “This will not be an easy year.”

Meanwhile, the British pound approached an 18-month low against the dollar as investors speculated inflation may go under 1 percent, forcing the Bank of England to retain the record-low interest rates for an extended period.

The pound dropped 1 percent to trade at $.5148 as of 12:09 p.m. in London after falling to $1.5035 on January 8, a low last touched in July 2013. The pound advanced 0.3 percent to steady at 77.91 pence per euro after advancing 0.5 percent since last Wednesday.

Analysts surveyed by Bloomberg News forecasted that consumer prices in U.K. increased 0.7 percent last month after rising 1 percent in November 2013. This would be the weakest level since June 2002 and way under the 2 percent target set by the central bank.

The yield on the 30-year gilt stood at 2.34 percent, up from 2.32 percent last Tuesday, its lowest on record. However, the gilts have yielded 16 percent in the year to Jan. 9, surpassing U.S. and German government bonds. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com