The real appreciated 1.2 percent to 1.9854 per U.S. dollar. The last time on an intraday basis that it traded stronger than 2 per dollar was May 30. The currency rallied 2.8 percent last week, the most since the five days ended Jan. 13.
“The central bank has been aggressive so investors are losing a bit of confidence” in their ability to speculate on a decline in the real, said Diego Donadio, a Latin America strategist at Banco BNP Paribas Brasil SA, in a telephone interview from Sao Paulo.
Brazil’s central bank sold 180,000 swap contracts worth a total $8.98 billion in auctions June 27, 28 and 29 to shield the real from European sovereign-debt turmoil.
The swaps are a reversal of the bank’s dollar purchases, which increased to $7.2 billion in April, the most in 13 months, to support the country’s exporters. The bank abandoned those purchases in May.
Yields on Brazilian interest-rate futures contracts fell to a record low after economists covering Latin America’s largest economy cut their 2012 growth forecasts for an eighth consecutive week, encouraging the central bank to sustain the pace of cuts in borrowing costs.
Brazil’s economy will grow 2.05 percent in 2012, according to the median estimate in a central bank survey of about 100 analysts published today. Expansion of 2.18 percent was projected a week earlier. Consumer prices will rise 4.93 percent in 2012, according to the survey, down from a 4.95 percent forecast a week earlier.
“That opens the way for more rate cuts,” said Andre Perfeito, the chief economist at Gradual Investimentos, in a phone interview from Sao Paulo.
Yields on the interest-rate futures contract due in January 2014 fell five basis points, or 0.05 percentage point, to 7.84 percent after touching a record low 7.82 percent.
Brazil’s central bank has cut its target lending rate by 4 percentage points since August to a record low 8.5 percent, the most among Group of 20 nations. Traders are betting policy makers will reduce the benchmark to 7.75 percent by the end of next month, interest-rate futures yields indicate.
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