Brazilian Real Advances as U.S. Retail Sales Exceed Forecasts

Brazil’s real gained for the first time in a week after U.S. retail sales rose more than forecast, boosting global growth optimism and increasing demand for emerging-market assets.

The sales figures overshadowed a report showing the median forecast of about 100 economists in a Brazilian central bank survey indicated a reduced outlook for 2012 expansion for the first time in four weeks.

“The market opened a bit better following the external environment,” Italo Abucater, the head of currency trading at Icap Brasil, said by phone from Sao Paulo.

The real appreciated 0.3 percent to 2.0357 per dollar at 6 p.m. in Sao Paulo. Swap rates on the contract due in January 2014 rose one basis points, or 0.01 percentage point, to 7.46 percent. Markets in Brazil were closed Oct. 12 for a national holiday.

Retail sales in the world’s largest economy rose 1.1 percent in September, surpassing the median 0.8 percent forecast of 77 economists surveyed by Bloomberg, Commerce Department figures showed today in Washington.

Swap rates maturing in July 2013 or later climbed as U.S. retail figures overshadowed the central bank survey showing analysts covering Brazil lowered their 2012 growth forecast to 1.54 percent, from 1.57 percent a week ago.

‘Remain Stable’

“If the U.S. keeps improving, the environment in 2013 may not be as disinflationary as the central bank was thinking,” Flavia Cattan-Naslausky, a strategist at Royal Bank of Scotland Group Plc, said by phone from Stamford, Connecticut. “The central bank meeting minutes will be the focus of the market this week. We’ll see if the central bank gives parameters of how long rates will remain stable.”

Policy makers led by central bank President Alexandre Tombini reduced the benchmark Selic rate by a quarter percentage point to a record 7.25 percent last week, the 10th consecutive round of cuts. Three dissenting members favored leaving interest rates unchanged.

The bank said keeping monetary conditions stable for a “sufficiently prolonged period” was the best strategy for balancing inflation risks stemming from a recovery in domestic activity with continued “complexity” in the global economy.

The minutes of last week’s monetary policy meeting will be released Oct. 18.

Analysts in today’s central bank survey forecast inflation of 5.43 percent this year, up from the previous week’s estimate of 5.42 percent, and predicted price increases of 5.42 percent next year, down from 5.44 percent. Brazil targets inflation of 4.5 percent, plus or minus two percentage points.

To contact the reporters on this story: Gabrielle Coppola in Sao Paulo at gcoppola@bloomberg.net; Josue Leonel in Sao Paulo at jleonel@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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