Brazil’s real rose to its highest level in nine months as economists raised their inflation forecasts for a sixth straight week, spurring speculation the central bank will let the currency strengthen to contain prices.
The real appreciated 0.4 percent to 1.9651 per U.S. dollar at the close in Sao Paulo on the first day of trading after Carnival, its strongest level since May 10. Swap rates due in January 2015 dropped one basis point, or 0.01 percentage point, to 8.16 percent.
Brazil’s consumer prices will rise 5.71 percent this year, according to the median forecast in a central bank survey of about 100 analysts published today. Analysts projected inflation of 5.68 percent in the previous week.
“The central bank survey looked very bad,” Paulo Petrassi, a managing partner at Leme Investimentos, said in a phone interview from Florianopolis, Brazil.
Brazil’s real slid 9 percent in 2012 and 11 percent in the prior year as Finance Minister Guido Mantega said major economies were debasing currencies such as the dollar while driving up those of developing nations. The weaker real helped spur inflation, which has exceeded the 4.5 percent midpoint of the central bank’s target range for 29 months.
The real fell from a nine-month high on Feb. 8 after the central bank intervened to stem gains triggered when Mantega signaled the government would allow the currency to advance another 5 percent.
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