Brazil Real Rises as U.S. Jobs Report Supports Stimulus Outlook

Brazil’s real rose for the first time in three days as a U.S. payrolls report added to speculation that the Federal Reserve will maintain a stimulus program that has supported emerging-market assets.

The currency appreciated 0.1 percent to 2.1723 per U.S. dollar in Sao Paulo. Swap rates on contracts maturing in January 2015 fell four basis points, or 0.04 percentage point, to 10.53 percent.

“The U.S. employment data were bad, which puts the issue of the Fed tapering stimulus on hold again,” boosting demand for the real, Hideaki Iha, a currency trader at Fair Corretora in Sao Paulo, said in a phone interview.

The real pared its gain as Finance Minister Guido Mantega said Brazil is reducing its intervention in currency markets. The central bank, while rolling over $988.3 million of foreign-exchange swaps, didn’t say in a statement yesterday whether it would do so for the rest of the $8.9 billion in contracts maturing Nov. 1.

The currency has gained 12 percent since Aug. 22, when Brazil announced a $60 billion program of swaps and credit lines to buoy the currency and curb import price increases. The real’s rally also boosts export prices and makes Brazil’s factories less competitive.

Mantega told reporters that about $4 billion of the 15 billion real ($6.9 billion) fee a consortium led by state-run Petroleo Brasileiro SA will pay after prevailing in the auction for the Libra offshore oilfield rights will come from abroad.

Petrobras Stake

Petrobras took a 40 percent stake in the only group to bid for the country’s biggest oil discovery, limiting the share of the fee its foreign partners will pay in dollars.

The Treasury sold 1.8 billion reais worth of inflation-linked bonds with maturities in 2018 and 2022 in an auction today. Annual inflation slowed to 5.75 percent through mid-October, still more than a percentage point above the central bank’s target.

Brazil’s central bank voted unanimously Oct. 9 to raise the target lending rate to 9.5 percent from 9 percent, marking the fourth straight time it increased borrowing costs by a half-percentage point.

In the U.S., employers added fewer workers to payrolls than projected in September. The 148,000 increase followed a revised 193,000 gain in August that was larger than initially estimated, Labor Department figures showed today in Washington. The unemployment rate fell to 7.2 percent, the lowest level since November 2008.

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