Brazil Swap Rates Rise as Job Gains Exceed Forecast; Real Falls

Brazil’s swap rates climbed after a report showed employers created more jobs in February than forecast, spurring speculation the central bank will increase borrowing costs to contain inflation.

Swap rates on the contract due in January 2016 rose for the first time in five days, increasing three basis points, or 0.03 percentage point, to 9.05 percent in Sao Paulo. The real depreciated 0.3 percent to 1.9899 per U.S. dollar.

Employers added a net 123,446 jobs last month, the Labor Ministry reported at 3 p.m. in Brasilia, exceeding the 95,148 median estimate of analysts surveyed by Bloomberg. Swap rates had fallen earlier on the day after a newspaper report indicated that the central bank will wait until May to lift borrowing costs from record lows instead of acting in April.

The jobs report “was surprising, a lot stronger than the market expected,” Paulo Nepomuceno, a fixed-income strategist at Coinvalores CCVM in Sao Paulo, said in a telephone interview.

Folha de S. Paulo reported today that increases in borrowing costs will be decided by the central bank, not the market, indicating that policy makers will delay any rate increase. The newspaper cited unidentified government assistants; the central bank declined to comment when reached by Bloomberg News.

Minutes of the central bank’s March 5-6 meeting indicated next meet April 16-17 and May 28-29.