Brazil Trade Surplus Falls 83% to Lowest in 10 Months

Brazil’s trade surplus narrowed to the lowest in 10 months in November, as exports fell for the third straight month and imports rose.

The surplus shrank 83.2 percent to $312 million in November, the Trade Ministry said on its website today. That compares with a $1.85 billion surplus in October and was lower than the $950 million median estimate by 20 economists surveyed by Bloomberg. The trade figure is the worst result since a $177 million deficit in January.

Exports fell 3.8 percent to $17.7 billion, the lowest in four months, the ministry said. Brazilians increased foreign purchases by 5.1 percent to $17.4 billion in November, the ministry said.

Economic growth that’s expected to reach the highest in more than two decades, coupled with strong domestic demand and the highest real interest rate among the Group of 20 nations, are boosting imports and strengthening Brazil’s currency.

Policy makers may keep borrowing costs unchanged at 10.75 percent next week, according to a weekly central bank survey of economists released this week, after raising the benchmark interest rate by 200 basis points this year to prevent “overheating.”

Brazil’s yield on the most traded interest-rate futures contract rose to a five-month high as inflation quickened more than expected and commodities rallied after manufacturing in China climbed in November. The yield on contracts maturing in January 2012 jumped 15 basis points to 12.14 percent at 9:10 a.m. New York time. The real gained 0.54 percent to 1.7051 per dollar.

Current Account

Brazil’s current account gap widened to a record in the year through October as credit expansion and record low unemployment boosted imports and spending by Brazilians abroad.

The deficit in the current account, the broadest measure of trade and services, was $3.7 billion in October, pushing the annual gap to a record $48 billion, the central bank said last week. Economists expected a monthly deficit of $4 billion, according to the median estimate of 16 analysts surveyed by Bloomberg.

The Brazilian real is trading at a “reasonable” level as the European debt crisis brings a temporary “truce” to the global currency war, Finance Minister Guido Mantega said in an interview yesterday.

Mantega said the government will take additional steps if necessary to prevent the real from strengthening and protect producers from foreign competition. The currency war will only end once the economies of rich nations recover, said Mantega, who was asked by President-elect Dilma Rousseff to remain in his post.

Rousseff takes office Jan. 1.

To contact the reporter on this story: Iuri Dantas in Brasilia at idantas@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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