Economy

Brazil’s Real Drops After Rousseff Keeps Lead in Election Poll

Brazil’s real dropped for the third time in four sessions after President Dilma Rousseff held her lead in an election poll.

Bloomberg News
20/06/2014 19:55
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Brazil’s real dropped for the third time in four sessions after President Dilma Rousseff held her lead in an election poll.

 

The real lost 0.4 percent to 2.2370 per dollar at 1:11 p.m. in Sao Paulo as most major currencies fell against the greenback. Swap rates on contracts maturing in January 2021 rose four basis points, or 0.04 percentage point, to 11.92 percent. The Ibovespa stock benchmark dropped the most in three weeks as state-run companies slumped.

 

“The voting simulations probably disappointed those who were hoping for the opposition to gain more ground,” Vladimir Caramaschi, the chief strategist at Credit Agricole in Sao Paulo, said in a phone interview. “It’s felt more in the stock market, but it could impact the currency a bit.”

 

Support for Rousseff’s re-election bid ahead of the Oct. 5 vote was 39 percent in the Ibope poll published yesterday, up from 38 percent previously. The real has posted the second-biggest gain among major currencies this year as surveys in late March started showing Rousseff losing popularity. That stoked speculation a new government might be better at fueling growth in Latin America’s largest economy.

 

Support for Aecio Neves, Rousseff’s main opponent, slipped one percentage point to 21 percent. The poll of 2,002 people from June 13 to June 15 was commissioned by the National Industry Confederation and had a margin of error of 2 percentage points.

 

Brazilian markets were closed for a holiday yesterday.

 

Investors are also watching closely the central bank’s intervention on the currency market, Caramaschi said. Brazil sold $198.6 million of foreign-exchange swaps today and rolled over contracts worth $494.6 million to support the real and limit import-price increases.

 

The central bank announced June 6 that it was extending its intervention, which had been scheduled to end this month.

 

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