Brazil’s Real Erases Gain After Net Outflow Posted in Early May

Brazil’s Real Erases Gain After Net Outflow Posted in Early May
by Paula Sambo/Bloomberg
10:13 AM BRT
May 13, 2015

Brazil’s real declined, erasing its gain after the central bank posted a net foreign-exchange outflow of $2.56 billion from May 1-8.
The real depreciated 0.2 percent to 3.0247 per dollar at 12:56 p.m. in Sao Paulo after earlier climbing 1.2 percent.
Lower house President Eduardo Cunha told reporters that voting on a decree limiting pensions for surviving relatives starts Wednesday. The measure, part of Finance Minister Joaquim Levy’s efforts to shore up public accounts and avoid a rating downgrade, lapses June 1 if it doesn’t pass Congress.
“As markets await the fiscal adjustment measures, negative data such as the outflow keep piling in,” Joao Paulo de Gracia Correa, a trader at Correparti Corretora de Cambio in Curitiba, Brazil, said in an e-mailed response to questions. “The overall picture is not pretty at all.”
Latin America’s biggest economy will shrink 1.2 percent this year, which would be the biggest contraction since at least the early 1990s, according to the median of estimates from economists surveyed by the central bank.
Ensuring fiscal stability is the government’s priority, and fiscal discipline is essential to improving the economy, Levy said at the Brazil Capital Markets Day event at the London Stock Exchange.
Swap rates on the contract maturing in January 2017, a gauge of expected changes in Brazil’s borrowing costs, declined 0.05 percentage point to 13.51 percent.