Brazil’s Real, Rate Futures Yields Fall on Slow Economic Growth


02/06/2012 03:19 AST  Bloomberg

Brazil’s real fell to a one-week low and yields on interest-rate futures contracts dropped after reports showed the nation’s economic growth was slower than forecast and U.S. unemployment unexpectedly increased.

Traders are projecting that central bank President Alexandre Tombini will reduce the target lending rate to as low as 7.75 percent by the end of August, the futures yields indicate. The real fell for a third straight month in May, its longest losing streak since February 2009.

“The economy is stuck,” Italo Lombardi, a Latin America economist at Standard Chartered Bank, said by phone from New York. “The GDP data reinforce the trend of the central bank to cut rates.”

The real declined 0.9 percent to 2.0401 per U.S. dollar after touching 2.0447, the weakest level since May 24. It fell 2.6 percent this week and 6.5 percent in May. Yields on the interest-rate futures contract due in January 2014 fell 4 basis points, or 0.04 percentage point, to 8.23 percent, extending their weekly decrease to 29 basis points.

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