Bloomberg News

Brazil Real Declines Toward Two-Month Low as Unemployment Rises

March 28, 2013

Brazil’s real fell toward a two- month low as a report showed unemployment rose and traders speculated that the central bank will allow the currency to weaken as it prioritizes job creation over damping inflation.

The real slid 0.3 percent to 2.0163 per dollar at 12:43 p.m. in Sao Paulo after falling to 2.0173 on March 26, the weakest level since Jan. 25. Swap rates due in January 2015 rose one basis point, or 0.01 percentage point, to 8.46 percent.

“The market knows that the real has already been stronger and that didn’t help inflation,” Jose Carlos Amado, a currency trader at Renascenca DTVM in Sao Paulo, said in a phone interview. “Rather, it harmed exporters.”

Unemployment increased to 5.6 percent in February, the highest level since June, from 5.4 percent in the prior month, the national statistics agency said today.

Brazil’s central bank reduced its 2013 growth forecast to 3.1 percent from 3.3 percent and said the probability that price increases will breach the 6.5 percent upper limit of the target range for the first time in a decade has increased to 25 percent, up from 14 percent in December.

To contact the reporters on this story: Blake Schmidt in Sao Paulo at bschmidt16@bloomberg.net; Josue Leonel in Sao Paulo at jleonel@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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