The real headed for the biggest weekly drop since mid-December as signs of muted growth in Europe and concern about intervention on the currency market fanned speculation investment in Brazil will slump.
The real declined 0.3 percent to 2.0443 per dollar at 10:09 a.m. in Sao Paulo, headed for a 0.5 percent weekly loss, the biggest since the week ended Dec. 14. Swap rates on the contract due in January 2017 rose one basis point, or 0.01 percentage point, to 8.67 percent, capping a 16 basis-point increase this week.
The real fell with most emerging-market currencies as an unexpected drop in U.K. retail sales signaled slowing growth and sapped demand for higher-yielding assets. Government intervention in the currency market and reduced forecasts for global expansion have spurred concern among investors that there will be less money flowing to Brazil’s economy this year, said Reginaldo Galhardo, a currency trader at Treviso Corretora in Sao Paulo.
“As long as investors don’t see bigger inflows, they won’t be comfortable buying reais,” Galhardo said in a telephone interview. “The data in Europe is weighing on the market.”
Policy makers forecast the world’s biggest emerging market after China expanded 1 percent in 2012, or about half the pace of the U.S and Japan, according to Bloomberg surveys.
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