Rousseff Said to Meet Tombini and Mantega on Brazil’s Real

Brazilian President Dilma Rousseff is meeting with central bank President Alexandre Tombini and Finance Minister Guido Mantega today to discuss the weakening real, according to a government official.

The official requested not to be named because he isn’t authorized to comment on the issue publicly.

Tombini also will skip this week’s meeting of the world’s top monetary policy makers in Jackson Hole, Wyoming and will remain in Brazil to monitor markets, said a central bank spokeswoman who couldn’t be identified in line with bank policy. Tombini had been scheduled to attend the Aug. 22-24 gathering, according to a version of his agenda published on the central bank website last week.

Brazil’s central bank has stepped up efforts to stem declines by the real after the currency tumbled to a 4 1/2 year low this week. The real’s fall prompted policy makers to announce they will roll over more than $5 billion in currency swap contracts to limit further declines.

Traders also expect the central bank to raise the Selic target rate at their Aug. 27-28 meeting as the weakening currency threatens to fan inflation. Policy makers over their past three gatherings boosted borrowing costs a total of 125 basis points.

“The real continues to move only in one direction and the market will continue to focus on the potential inflation pass through with this speed of depreciation,” Nomura Securities analyst Andre Ikeda said in a research note e-mailed to clients today.

Swap Rates

Swap rates on the contract due in January 2015, the most traded in Sao Paulo today, rose 20 basis points to 10.46 percent from yesterday. The real fell 2.5 percent to 2.4543 per U.S. dollar today, and in the past three months has weakened 17 percent -- the fastest pace among the 16 most-traded currencies tracked by Bloomberg.

Brazil’s central bank will supply currency hedge and liquidity to all market segments as needed, Tombini said in a statement posted on the central bank website Aug. 19. One-way bets in the currency market may lead to losses, Tombini added.

Consumer prices as measured by the IPCA-15 price index rose 0.16 percent from July 13 to Aug. 13, the national statistics agency said in a report published on its website today. That exceeded the median forecast of a 0.15 percent increase from economists surveyed by Bloomberg and was more than double the 0.07 percent inflation rate in mid-July.

To contact the reporters on this story: Matthew Malinowski in Brasilia at mmalinowski@bloomberg.net; Raymond Colitt in Brasilia Newsroom at rcolitt@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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