Yields on most Brazilian interest- rate futures contracts fell as slowing economic growth in China, the Latin American country’s largest trading partner, prompted traders to step up bets on an interest-rate cut tomorrow. The real gained.
Brazil’s real strengthened for a second day on speculation the central bank will act to stop the currency’s depreciation against the dollar while European policy makers act in concert to shield banks from the sovereign debt crisis.
Leaders from South America came to New York this week to tout their combined economic strength in the face of financial turmoil in developed nations. They’ll return home with their armor dented after investors dumped the region’s stocks, bonds and currencies.
Traders are moving closer to betting Alexandre Tombini will be the first Brazilian central bank president in more than a decade to keep the benchmark interest rate unchanged at his first policy meeting.
Brazil’s consumer prices will rise this year and next more than analysts previously expected, according to a central bank survey, adding to pressure for policy makers to resume interest rate increases early next year.
The Bovespa index fell the most in two weeks after a report showed U.S. employment growth stalled last month, adding to concern that the expansion in Brazil’s second-biggest trading partner is faltering.
Brazil’s current account gap will widen to a record $60 billion in 2011 from $49 billion in 2010, the central bank forecast today, as domestic demand and the real’s rally boost spending on imports and overseas travel.