Brazil Swap Rates Drop on China Growth Concern; Real Advances
Swap rates on the contract due in January 2015 dropped one basis point, or 0.01 percentage point, to 8.33 percent at 10:02 a.m. in Sao Paulo. The real appreciated 0.1 percent to 2.0065 per dollar after gaining 0.6 percent yesterday, the biggest advance since April 16.
Chinese stocks fell after JPMorgan Chase & Co. reduced its growth outlook for the nation’s economy and concern mounted that the government is introducing more property restrictions to liming housing price gains. “External uncertainties” require that Brazil’s monetary policy “be managed with caution,” central bank policy makers said in a statement accompanying their decision to raise borrowing costs last month.
“Because of the weight that the central bank gives the external environment, any sign things are getting worse in the global economy affects the market,” Jankiel Santos, the chief economist at Banco Espirito Santo de Investimento, said by phone from Sao Paulo. “The latest data, whether it’s from Europe or from China, has been a negative surprise.”
The central bank’s board voted 6 to 2 on April 17 to raise the target lending rate by 25 basis points to 7.50 percent from a record low 7.25 percent.
To contact the editor responsible for this story: David Papadopoulos at email@example.com