Brazil Swap Rates Drop After Current Account Report; Real FallsFilipe Pacheco
Brazil’s swap rates declined after a report showed the current account deficit narrowed more than forecast in February, easing concern that the government will stoke inflation by stepping up borrowing.
Swap rates on contracts maturing in January 2015 fell five basis points, or 0.05 percentage point, to 11.17 percent at 11:19 a.m. in Sao Paulo. The real depreciated 0.2 percent to 2.3301 per U.S. dollar.
The central bank reported today that the deficit in Brazil’s current account, the broadest measure of trade in goods and services, decreased to $7.4 billion in February from $11.6 billion in the prior month. The median forecast of economists surveyed by Bloomberg was $8 billion.
To curb inflation, policy makers have raised the target lending rate by 75 basis points this year to 10.75 percent, the largest increase among major economies after Turkey. Central bank President Alexandre Tombini reiterated last week that policy makers are acting to ensure inflation will slow to the 4.5 percent official target.