Brazilian Real Trades at One-Week Low on Rousseff Aide’s Comment

Brazil’s real traded at a one-week low after President Dilma Rousseff’s campaign coordinator supported the study of capital controls and said elected officials should set monetary policy.

The currency dropped less than 0.1 percent to 2.2150 per U.S. dollar at 10:07 a.m. in Sao Paulo, the weakest level on a closing basis since May 7. Swap rates on contracts maturing in January 2017 fell three basis points, or 0.03 percentage point, to 12.11 percent.

Rousseff’s administration should consider implementing measures to prevent capital flight if elected for a second term, Rui Falcao, the coordinator of her campaign, said in an interview yesterday. Last year, the government unwound controls it implemented to limit dollar inflows that helped push the real to a 12-year high in July 2011.

“The views expressed by Falcao seem to serve as a damper for expectations that a second Rousseff administration would lead to important market reforms,” Eduardo Suarez, a Latin America currency strategist at Bank of Nova Scotia, said in an e-mailed research note to clients today.

Elected officials, rather than the appointed central banker, should have the final say in determining monetary policy, Falcao said.

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

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Dennis Fitzgerald, Rita Nazareth

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.