Brazil’s Real Touches Five-Year Low Ahead of Elections Runoff

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Brazil’s Real Touches Five-Year Low Ahead of Elections Runoff The Brazilian real dropped to its lowest level in five years after an opinion poll indicated that President Dilma Rousseff is virtually tied with her rival Aecio Neves in the Oct. 26 election runoff.

Investors have been banking on a Neves win in the hope that he might enact policies that will trigger economic recovery.

The real fell 1.2 percent to trade at 2.4885 per U.S. dollar as of 10:12 a.m. Sao Paulo time. Swap rates, which measure forecasts of changes in interest rates, jumped 23 basis points to 12.18 percent for the contract that matures in January 2016.

“There is a broad risk-off mood globally, and the real is being affected by that,” Juliano Ferreira, a Sao Paulo-based strategy analyst at Cap do Brasil, told Bloomberg News. “The bad mood among investors combines with worse prospects for Neves in the race.”

A Datafolha survey done on Oct. 14-15 and an Ibope poll conducted on Oct. 12-14 both showed that Neves leads with 45 percent backing ahead of the runoff against Rousseff with 43 percent. Both polls have a margin of error of +/-2 percentage points.

Meanwhile, the South Korea’s won touched its highest level in two weeks after declining U.S. retail sales fuelled speculation that Federal Reserve won’t hike interest rates sooner than expected.

The won jumped 0.1 percent to end the trading session at 1,061.60 per dollar. It had earlier touched 1,057.35, its highest level since Sept. 30. The won’s one-month implied volatility, which tracks the expected moves in the exchange rate that is used to set prices to options, remained slightly unchanged at 7.87 percent. 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