Brazil’s Real Sinks as Polls Show Rousseff’s Support Increasing

Brazil’s real slipped after election polls showing increased support for President Dilma Rousseff’s re-election bid.

The real slid 0.3 percent to 2.2429 per dollar. Swap rates, a gauge of expectations for interest-rate moves, climbed eight basis points, or 0.08 percentage point, to 11.34 percent on the contract maturing in January 2016.

Former senator Marina Silva had 46 percent of voter support in a potential Oct. 26 runoff election and Rousseff had 39 percent, according to a Ibope poll published yesterday that has a margin of error of plus or minus two percentage points. That compares with 45 percent for Silva and 36 percent for Rousseff in a previous poll published Aug. 26. Speculation that a new government may help bolster Brazil’s faltering economy has helped to push the real up 5.3 percent in 2014, the most among 31 major currencies tracked by Bloomberg.

“Rousseff has advanced more than Marina in the last polls, and the market does not like to see that,” said Reginaldo Siaca, a currency manager at Advanced Corretora de Cambio in Sao Paulo.

A separate poll published by Datafolha yesterday showed Silva’s lead in the runoff narrowing within the margin of error to seven percentage points from 10 percentage points in a survey conducted the previous week.

In the U.S., Labor Department data may show tomorrow that 230,000 workers were added last month after 209,000 the month prior, according to the median estimate in a Bloomberg survey.

Rates Unchanged

“The dollar advanced this afternoon on expectations about the job market data,” Joao Medeiros, director at Pioneer Corretora, said in a telephone interview from Sao Paulo.

Yesterday Brazil’s central bank signaled borrowing costs will remain unchanged until at least the end of the current administration in December.

The bank’s board, led by President Alexandre Tombini, held the benchmark rate at 11 percent for its third straight meeting.

Brazil’s economy contracted 0.6 percent in the second quarter after shrinking a revised 0.2 percent during the first three months of the year, the national statistics agency said Aug. 29.

To support the real and limit import-price increases, Brazil sold foreign-exchange swaps today worth $197.5 million as part of an intervention program. The central bank has refrained from announcing an auction to roll over the $6.68 billion in contracts expiring Oct. 1.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE