Japanese investors are piling into structured notes linked to the exchange rate between the Brazilian real and the yen on bets the Latin American country’s tighter monetary policies will maintain its currency’s strength.
Brazil’s swap rates declined to a four-month low after the central bank stopped raising borrowing costs and signaled it probably won’t consider resuming the tightening of policy until after the October election.
A measure of the Mexican peso’s fluctuations between gains and losses fell to the lowest level since September 2008 as a U.S. report indicated that the Latin American nation’s biggest export market is recovering.
The yen rose against all of its 16 major peers as reports showing a weaker-than-forecast European gross domestic product and an unexpected decline in U.S. industrial production fueled concern about the pace of economic growth, increasing demand for Japan’s currency as a haven.
The euro fell to the lowest level in 11 weeks versus the dollar and yen after European Central Bank Vice President Vitor Constancio said policy makers are prepared to add further monetary stimulus if needed.
Yields on Brazilian interest-rate futures extended their weekly drop to the biggest since 2008 as the government planned to reduce returns on savings accounts to facilitate deeper cuts in the benchmark Selic rate.