Brazilian Currency Drops as China Weakness Damps Local Prospects
By Paula Sambo/Bloomberg
10:20 AM BRT
April 13, 2015
Brazil’s real fell the most in two weeks as a decline in China’s imports damped prospects for the Latin American nation’s suppliers of raw materials.
The real dropped for a third straight day, declining 0.8 percent to 3.1010 per dollar at 9:37 a.m. in Sao Paulo. The decrease was the biggest on a closing basis since March 27.
The local currency joined a decline across emerging markets as China also reported an unexpected decrease in exports in March, raising questions about the durability of global demand. While Brazilians took to the streets Sunday to protest the corruption scandal at the state-controlled oil company and government austerity measures, the overall turnout was smaller than for demonstrations held last month.
“The trigger for the real’s decline versus the dollar was the heavy drop in Chinese imports and exports, which is extra confirmation that the Chinese economy is slowing,” Ipek Ozkardeskaya, a market analyst at London Capital Group, said by e-mail.
The real was still up 3.2 percent this month after party leaders in Brazil’s ruling coalition agreed to support the government’s plan to trim deficits.
China’s imports decreased 12.3 percent in March from a year earlier, leaving a trade surplus of 18.16 billion yuan ($3 billion). Exports fell 14.6 percent, exceeding the median forecast of economists surveyed by Bloomberg, which called for a 8.2 percent increase.
Swap rates on the contract maturing in January 2017, a gauge of expectations for changes in Brazil’s borrowing costs, decreased 0.01 percentage point to 13.01 percent.