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Brazilian Swap Rates Fall as Inflation Slows; Currency Declines

Brazil’s swap rates dropped the most in a week after a report showed inflation slowed more than economists forecast, spurring speculation that the central bank will push back an increase in borrowing costs.

Swap rates due in January 2015 dropped six basis points, or 0.06 percentage point, to 8.53 percent at 10:11 a.m. in Sao Paulo, the biggest decline on a closing basis since March 14. Swap rates have fallen five basis points this week. The real depreciated less than 0.1 percent to 2.0101 per dollar, extending its drop since March 15 to 1.3 percent.

Brazil’s IPCA-15 index of consumer prices rose 0.49 percent in the month through March 15 after a prior increase of 0.68 percent. The median forecast of 33 economists surveyed by Bloomberg was for a 0.53 percent advance.

“The inflation number was lower than expected,” Newton Rosa, the chief economist at SulAmerica Investimentos in Sao Paulo, said in a phone interview. “This result will strengthen the arguments of those who say the central bank should push the rate hike from April to May.”

To contact the reporter on this story: Blake Schmidt in Sao Paulo at bschmidt16@bloomberg.net

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

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