Brazil’s real weakened to a level weaker than 2.4 per dollar for the first time since March 2009 on speculation the Federal Reserve will curtail a stimulus program that has boosted emerging-market assets.
The currency depreciated 0.6 percent to 2.4062 per U.S. dollar at 9:52 a.m. in Sao Paulo. The currency fell 2.2 percent on Aug. 16, the biggest drop since May 2012. Swap rates on the contract due in January 2015 climbed 26 basis points, or 0.26 percentage point, to 10.59 percent today.
Brazil’s currency has lost 15 percent in the past three months, boosting the cost of imports and adding to inflation that already exceeds central bank targets. The real’s decline to a 4 1/2-year low last week prompted the central bank to announce that it will roll over more than $5 billion in currency swap contracts designed to limit losses.
“The volatility in Brazil’s currency markets has made clear that we are witnessing a faster-than-expected adjustment of investors’ portfolio positions to the prospects of monetary normalization in the U.S.,” Tony Volpon, director of emerging-market research for the Americas at Nomura Holdings Inc., wrote in a research report. “The need for investors to rebalance portfolios will temporarily lead to an ‘overshoot’ in the nominal exchange rate.”
The real will end 2013 at 2.3 per dollar, according to the median forecast of a central bank survey of economists published today, weaker than 2.28 per dollar projected a week ago.
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