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.
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.
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.
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.
Mexican peso-denominated bonds fell the most in almost six weeks after Petroleos Mexicanos, the state-owned oil monopoly, raised prices for the lowest grade of gasoline, sparking concern inflation is poised to accelerate.