Brazil Real Trades at Two-Month High on Concern Over Inflation

Brazil’s real traded at a two-month high on speculation the central bank will allow it to gain further to ease inflation concern.

The currency gained 0.2 percent to 2.0283 per U.S. dollar at 11:35 a.m. in Sao Paulo, the strongest level on a closing basis since Oct. 26. Swap rates due in January 2015 decreased two basis points, or 0.02 percentage point, to 7.72 percent.

About 100 economists in a weekly central bank survey published today raised their median inflation forecast for the end of 2013 to 5.49 percent from 5.47 percent the week before. The central bank strengthened the real in November by selling currency swaps after it reached a three-year low.

“With the depreciation of the real, a yellow light has come on,” Francisco Carvalho, the head of currency at Liquidez DTVM. “Inflation will continue to cause more concern in the short term.”

To contact the reporters on this story: Blake Schmidt in Sao Paulo at bschmidt16@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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