The month-long slump that has made Brazil’s real the worst performer in Latin America may deepen as Bank of America Corp. and Barclays Plc say investment will slow before the vote to replace President Luiz Inacio Lula da Silva .
Swings in the Brazilian real are declining to a two-year low ahead of presidential elections as the central bank steps up dollar purchases to offset a surge in investment in the country’s stock and fixed-income markets.
Brazil’s attempt to end the currency’s 28 percent ascent since October 2008 is prompting JPMorgan Chase & Co. and Barclays Capital to predict the biggest tumble in benchmark real-denominated bonds in 21 months.
Chile’s peso rose the most in more than two years and interest-rate swap rates spiked after European leaders agreed to boost their rescue fund and persuaded bondholders to accept 50 percent writedowns on Greek debt.
Brazilian Finance Minister Guido Mantega’s failure to stem a currency rally spurred by Petroleo Brasileiro SA’s $70 billion share sale is leading international investors to make a $14 billion wager on the real.
The biggest rally in Mexican peso bonds in two years is a sign to Barclays Plc and Silva Capital Management LLC to sell the debt on a bet the notes will slump as global investor demand for the safest assets wanes.
Chilean interest-rate swap rates with long maturities fell and short-dated swap rates rose after the U.S. warned that the economy may decelerate even as economists expect Chile’s central bank to lift borrowing costs.