The Ibovespa dropped for a third day as planemaker Embraer SA led losses among exporters on speculation that a strengthening local currency will erode revenue from outside Brazil.
Oil company OGX Petroleo e Gas Participacoes SA contributed the most to the index’s decline. Iron-ore producer Vale SA, the measure’s heaviest-weighted stock, followed metals lower. Retailer B2W Cia. Digital was the best performer on the benchmark as traders pared bets on higher borrowing costs.
The Ibovespa dropped 0.4 percent to 49,866.92 at the close of trading in Sao Paulo, with 33 of 71 stocks lower, after erasing an earlier advance of 1 percent. The index’s 10-day volatility, a measure of price swings, climbed to a two-week high. The real appreciated 1.2 percent to 2.3437 per U.S. dollar at 5:27 p.m. local time as the central bank’s intervention supported the currency.
“Shares of exporters, such as Vale, have benefited from the real’s depreciation, and now there’s a correction, with the central bank acting more aggressively in the currency market,” Joao Pedro Brugger, a portfolio manager at Leme Investimentos, said in a phone interview from Florianopolis, Brazil.
The real has rallied 3.9 percent since Aug. 22, when the central bank announced a $60 billion intervention program. It is still down 11 percent in the past three months, the worst performance among major Latin American currencies.
Embraer, which gets 86 percent of its revenue outside Brazil, slipped 1.6 percent to 19 reais. OGX sank 17 percent to 57 centavos. Vale fell 1.5 percent to 31.25 reais. The Bloomberg Base Metals 3-Month Price Commodity Index declined 0.8 percent.
B2W jumped 6.3 percent to 13.29 reais. Swap rates on contracts due in January 2015 fell 10 basis points, or 0.10 percentage point, to 10.2 percent.
The Ibovespa has gained 11 percent from this year’s low on July 3 as higher commodities prices and a weaker real boosted raw-material exporters. Brazil’s benchmark gauge climbed 7.3 percent in dollar terms during this period, compared with a decline of 0.2 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume of stocks in Sao Paulo was 7.03 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.75 billion reais this year through Aug. 26, according to data compiled by the exchange.