March 31 (Bloomberg) -- Brazil's real had its first monthly decline since November amid speculation that a U.S. economic recession will curb demand for emerging-market assets.

The real lost 3.5 percent in March, halting three months of gains. Brazil's currency is still up 17.5 percent over the past 12 months.

``Investors are more worried now about international liquidity,'' said Aristides Jannini, who oversees about $400 million as director of asset management in Sao Paulo at WestLB Asset Management do Brasil. ``Brazil is a liquid market, and that's good, but it also means that when things get ugly, people come here to cash out.''

The real fell today as some traders pushed the currency lower for the settlement of a currency futures contract know as Ptax. The currency fell 0.5 percent to 1.7519 per dollar at 5:30 p.m. New York time, after most trading had ended in Brazil, compared with 1.7434 per dollar on March 28. The Ptax was set today at 1.7489.

Sliding commodity prices also curbed demand for reais, Jannini said.

The Reuters/Jefferies CRB Index of 19 commodities fell as much as 2.3 percent today, led by declines in soybeans, wheat and crude oil. Gold fell today after a decline in commodity prices reduced demand for precious metals as a hedge against inflation.

A rally in commodities helped pushed the real up almost 100 percent in the past five years, the biggest gain among the 16 most-traded currencies against the dollar. Brazil is the world's biggest exporter of iron ore, orange juice, sugar, beef and cane- based ethanol.

Rate Increases

Economists raised their year-end forecast for the overnight rate to 12 percent from 11.25 percent the prior week, on a worsening outlook for inflation, according to the median forecast in a weekly survey of about 100 financial institutions released today by the central bank. Economists also raised their 2008 inflation forecast to 4.47 percent from 4.44 percent. Inflation was 4.61 percent in the 12 months through February, above the government's 4.5 percent target.

The yield on Brazil's overnight interest-rate futures contract for January delivery fell 1 basis point, or 0.01 percentage point, today to 12.37 percent. That's more than 1 percentage point above the central bank's target overnight rate of 11.25 percent, showing traders are betting policy makers will raise the rate this year to curb inflation.

The yield on Brazil's zero-coupon bond due in January 2010 fell 1 basis point to 13.26 percent, according to Banco Votorantim SA.

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net

Last Updated: March 31, 2008 17:32 EDT