Brazil Real Heads for Worst Month Since November

Brazil’s real headed for its biggest monthly loss since November as government measures to curb the currency’s appreciation and concern the global recovery will falter sapped demand for Brazilian assets.

The real lost 5.8 percent in March, the worst performer among emerging-market currencies. It rose 0.1 percent to 1.8201 at 9:54 a.m. in Sao Paulo, from 1.8214 yesterday, and has gained 2.5 percent this quarter.

Brazil’s real underperformed major and emerging-market currencies this month as the government expanded taxes and stepped up interventions in the foreign-exchange market to protect exporters from what President Dilma Rousseff called a “monetary tsunami” created by developed nations seeking to undervalue their currencies. Signs of slowing growth in China and European debt concern also weighed on the real, said Ures Folchini, head of fixed income at Banco West LB do Brasil.

“There are signs that the measures are beginning to take effect, inflows are diminishing,” Folchini said by phone from Sao Paulo. “The fears about China and Europe are helping the government to execute its strategy of having a stronger dollar.”

The yield on the Brazilian interest-rate futures contract due in January 2014 fell two basis points, or 0.02 percentage point, to 9.51 percent. It plunged 97 basis points this quarter as the central bank accelerated the pace of interest-rate cuts with a 75 basis-point reduction on March 7 that exceeded the majority of analysts’ forecasts.

(Corrects yesterday’s closing level in second paragraph.)