Brazil’s real posted its biggest gain in almost two years as the central bank stepped up efforts to stem the world’s worst currency decline, announcing a $60 billion intervention program involving swaps and loans.
A year after it began, Brazil’s municipal bond market has been brought to a standstill by the federal government after Credit Suisse Group AG and Bank of America Corp. provoked a backlash by collecting $140 million in fees from the first two borrowings.
Brazil’s government doesn’t need to sell bonds denominated in dollars “at any cost” because it has already met 80 percent of its external financing needs for 2010, Deputy Treasury Secretary Paulo Valle said.
International pension and sovereign wealth funds are increasing demand for local Brazilian government bonds, lured by interest rates above 10 percent and a stable economy, Deputy Treasury Secretary Paulo Valle said.
Brazil’s benchmark dollar bond yields more than debt with similar maturities even after an eight-year rally. President Luiz Inacio Lula da Silva’s administration says a stepped-up buyback plan would smooth out the yield curve and bring borrowing costs back to reality.