Brazil’s Real Drops on Reports Government Planning for Deficit

Brazil’s real fell the most in the region on speculation the government will change this year’s budget target to a deficit from a surplus, highlighting its inability to shore up the country’s finances.

All four of Brazil’s largest newspapers now report that the government will revise this year’s budget target for a third time, forecasting a budget deficit excluding interest payments that may surpass 50 billion reais. The deficit may reach 90 billion reais in the most “radical” scenario which includes the government paying off all its debts to public banks, Folha de S. Paulo reported without saying where it obtained the information.

The real dropped 0.5 percent to 3.9246 per dollar at 9:21 a.m. in Sao Paulo, the largest decline among 16 major currencies after the South African rand.

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