Brazil October Current Account Deficit Expands for Second Monthby
Gap was $4.2 billion, in line with estimate of $4.1 billion
Foreign investment grew to $6.7 billion, biggest of year
Brazil’s current account gap in October expanded for the second straight month as the trade surplus shrank by almost $1 billion.
The deficit in the current account, the broadest measure of trade in goods and services, widened in October to $4.2 billion from a revised $3.1 billion a month earlier, the central bank said Thursday. Foreign investment in Brazil during the month rose to $6.7 billion, the highest this year. Economists surveyed by Bloomberg forecast a gap of $4.1 billion and foreign investment of $6 billion for last month.
Even though it shrank in October, the trade surplus has been one of the few bright spots in Latin America’s biggest economy this year. The weaker exchange rate is motivating exporters to boost sales volume and is forcing consumers to cut back on imports. While the real appreciated last month, it lost some ground this week as a mushrooming corruption scandal ensnared allies of President Dilma Rousseff.
The real weakened further Thursday, declining 0.5 percent to 3.7647 per U.S. dollar at 10:38 a.m. local time. Swap rates on the contract due in January 2017 rose 26 basis points to 15.53 percent on wagers the central bank will resume monetary tightening next year.
Policy makers on Wednesday night left the key rate unchanged at a nine-year high for the third straight meeting, signaling they may raise rates in 2016 as a shrinking economy fails to damp above-target inflation.