The Brazil real posted its first drop in four days after a survey showed that President Dilma Rousseff will be victorious in an election runoff despite the weak economic growth.
The real plunged 0.3 percent to trade at 2.2204 per dollar as of 12:11 p.m. local time. The swap rates, which measure the expected interest rate fluctuations, gained 0.03 percentage point or three basis points, to 11.08 percent on contract maturing on January 2017.
“There is always a negative reaction for the real when polls show Rousseff has a chance of being re-elected,” Reginaldo Galhardo, a Sao Paulo-based foreign-exchange manager at Treviso Corretora de Cambio, told Bloomberg.
The Ibope poll, which was conducted on July 18-21, indicated that the approval ratings for Rousseff in the October polls fell to 38 percent in July from June’s 39 percent. However, this is still higher than the score for her main rival Senator Aecio Neves, who has 22 percent backing.
Should there be no candidate with a higher number of votes than all the other rivals combined, the two leading candidates will face each other in the second round. Should there be a runoff between Neves and Rousseff, she will be ahead by 8 percentage points, according to last week’s data by research firms Sensus and Datafolha.
To boost the real and curb imported inflation, Brazil offloaded $198.7 million worth of currency swaps on Wednesday and rolled over contracts valued at $346.4 million. The central bank intends to continue placing swaps worth $200 million for sale every business day until at least the end of the year. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at email@example.com