Articolo ottimista sul real
Brazil Real to Surge 9% Even With Central Bank Action (Update1)
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By Camila Fontana and Ye Xie
April 16 (Bloomberg) -- Brazil’s real, the best performing emerging-market currency in the past year, will surge more than 9 percent by the end of the year even as the central bank seeks to curb gains by purchasing dollars, Stone Harbor Investment Partners said.
The currency will increase to 1.6 per dollar, driven by higher commodities prices, growth in China and investors moving out of developed countries, from 1.7488 yesterday, said
Pablo Cisilino, who manages $12.5 billion in emerging-market debt at Stone Harbor.
Brazil’s central bank yesterday bought dollars twice in the spot market for the first time since July 2007 in an effort to curb the real’s 25 percent rally in the past 12 months. The
strategy may cost Brazil $20 billion a year, New York-based Cisilino said.
“They will try to stop the real’s run, but the issue is that it’s becoming increasingly expensive to do so,” Cisilino said in an interview. “At some point, they are better off simply subsidizing the export sector if they are so concerned.”
The real fell 0.1 percent to 1.7507 per U.S. dollar at 8:36 a.m. New York time, from 1.7488 yesterday. The currency pared its weekly gain to 0.8 percent.
Costly Strategy
The currency dropped 0.3 percent yesterday after the central bank’s purchases, erasing an earlier gain of as much as 0.8 percent. The central bank bought the U.S. currency for 1.7424 reais each at an auction.
The practice is money-losing because the central bank pays higher costs to issue debt than the interest it earns from U.S. Treasuries. The yield on 10-year real-denominated bonds was 13 percent yesterday, compared with 3.8 percent for the same- maturity U.S. Treasury notes.
“They can slow down the process, but that’s the best they can hope for,” Cisilino said.
The real may gain as much as 10 percent by July as the central bank raises interest rates to stem inflation, spurring purchases by global investors searching for higher yields, according to UBS AG.
Interest-rate futures contracts indicate the central bank will raise the benchmark lending rate for the first time in 19 months on April 28 to curb inflation and prevent Latin America’s largest economy from overheating. The rate has been at a record low of 8.75 percent since July 2009.
Consumer Prices
The
consumer price index used as the main reference in the central bank’s inflation target system rose to a 10-month high of 5.17 percent in March, the national statistics agency said on April 8. It was the third consecutive month that the index exceeded the central bank’s 4.5 percent target.
In the overnight interest rate futures
market, the yield on the contract due January 2011 rose five basis points yesterday to 10.71 percent, the highest level since April 20, 2009.
Brazil sold $750 million of bonds in overseas markets, taking advantage of the lowest borrowing costs since October 2007.
To contact the reporters on this story:
Camila Fontana in Sao Paulo at
[email protected];
Ye Xie in New York at
[email protected]
Last Updated: April 16, 2010 08:42 EDT
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