The world’s largest currency traders are recommending their clients bet Brazilian Finance Minister Guido Mantega’s success in stemming gains in the real will be short-lived as foreign investment picks up.
Showing posts with label BRL Overvaluation. Show all posts
Showing posts with label BRL Overvaluation. Show all posts
Monday, May 23, 2011
Tuesday, March 29, 2011
Brazil Imposes 6% Tax on International Bonds Maturing in Up to One Year
Brazilian President Dilma Rousseff raised taxes on corporate loans and debt sales abroad by banks in a bid to contain a 39 percent gain since the end of 2008. The real erased this year’s losses and yields on interest-rate futures rose.
Brazil imposed a tax of 6 percent on international bond sales and loans with an average minimum maturity of up to 360 days, according to a decree published today in the Official Gazette. Companies had paid a 5.38 percent tax on loans up to 90 days and zero tax when the operation exceeded three months.
Brazil imposed a tax of 6 percent on international bond sales and loans with an average minimum maturity of up to 360 days, according to a decree published today in the Official Gazette. Companies had paid a 5.38 percent tax on loans up to 90 days and zero tax when the operation exceeded three months.
Wednesday, February 16, 2011
Brazil focused on real-denominated yield curve
* Brazil to add liquidity to dollar-denominated benchmarks
* Aims to consolidate long-end of interest-rate curve
* Aims to consolidate long-end of interest-rate curve
Monday, January 10, 2011
Brazil Allows Sovereign Fund to Trade Currency Derivatives; Real Weakens
The real fell 0.5 percent to 1.6925 per U.S. dollar at 10.59 a.m. in Sao Paulo. Photographer: Adriano Machado/Bloomberg
Brazil allowed its sovereign wealth fund to trade currency derivatives, signaling President Dilma Rousseff’s administration is ready to take additional measures to curb the rally in the real.
Thursday, January 6, 2011
Brazil Sets Reserve Requirements for Currency Positions to Stem Real Rally
Monetary Policy Director Aldo Mendes. Photographer: Sebastian Bravo/Bloomberg
The new rules have the potential to reduce short positions in the dollar to $10 billion from $16.8 billion in December as banks seek to avoid paying reserve requirements on currency operations, Aldo Mendes, the central bank’s director of monetary policy told reporters in Brasilia.
Friday, March 5, 2010
Mantega Says Brazil Currency Situation Not ‘Ideal’
Mantega Says Brazil Currency Situation Not ‘Ideal’
March 5 (Bloomberg) -- Brazilian Finance Minister Guido Mantega said today the country’s currency situation isn’t “ideal,” signaling the government may step up interventions in the market as it seeks to temper the real’s gains.
“We have a relatively stable situation now,” Mantega said today in a speech from Sao Paulo. “It’s not an ideal situation. We haven’t resolved the competitiveness issue.”
March 5 (Bloomberg) -- Brazilian Finance Minister Guido Mantega said today the country’s currency situation isn’t “ideal,” signaling the government may step up interventions in the market as it seeks to temper the real’s gains.
“We have a relatively stable situation now,” Mantega said today in a speech from Sao Paulo. “It’s not an ideal situation. We haven’t resolved the competitiveness issue.”
Sunday, December 6, 2009
Brazil Treasury Secretary: Overseas Bond Likely In December - WSJ.com
Brazil Treasury Secretary: Overseas Bond Likely In December
SAO PAULO (Dow Jones)--Brazil's government likely will issue another overseas bond before the end of the year, Treasury Secretary Arno Augustin said Friday.
'We are looking to build a better yield curve and improve the quality of our debt management,' Augustin said in a telephone interview.
He said the bond likely would be denominated in U.S. dollars and carry a 10-year term. He said it was possible the government would reopen its 2019 bond. He didn't offer any idea about the size of the offer.
Augustin said the government was also studying a possible overseas bond denominated in the Brazilian real. 'This is on our agenda,' he said. 'However, it is not likely for the short term since rates for dollar-denominated bonds are so good right now. A real-denominated issue is possible in 2010.'
Brazil has accessed the international debt market four times this year. In January, Brazil issued $1.025 billion in global bonds due in 2019. The bonds were sold at a yield of 6.127%. In May, it reopened the operation, raising another $750 million at a yield of 5.8%.
In July, the treasury obtained $525 million from the issue of an overseas bond due in 2037, with a yield of 6.45%. At the end of September, it raised $1.27 billion with the issue of a global bond due 2041, with a yield of 5.8%.
In the September operation, the government took advantage of a sovereign upgrade by Moody's, tapping the international bond market to fill out its debt curve.
In September, Moody's Investors Service raised Brazil's sovereign credit rating to Baa3, an investment-grade rating, more than a year after Standard & Poor's and Fitch Rating did so.
Brazil has issued real-denominated bonds overseas before, most recently in May 2008. At that time, it raised 750 million Brazilian reals ($441 million) from the reopening of an existing 2028 bond.
'Given the current international environment of low interest rates, Brazil's government will continue its policy of repurchasing overseas debt,' Augustin said.
In 2008, Brazil repurchased overseas bonds with total face value of $1.2 billion.
'We would like to buy more, but investors seem like they want to hold on to their Brazilian paper,' Augustin said.
The treasury secretary said Brazil's government will release its annual domestic debt management plan at the beginning of 2010. 'I can already tell you at least one thing about the plan,' Augustin said. 'We will aim to reduce the debt-to-GDP ratio next year.'
The debt-to-GDP ratio was 44.8% as of Oct. 31, up from 36.0% at the end of 2008. Brazil's public sector debt rose this year because of the global recession, which caused a decline in tax revenue.
But Brazil's economy is expected to rebound in 2010. Most economists are expecting growth of 5% next year after an expansion of no more than 1% for 2009.
Regarding Brazil's volatile foreign exchange market, Augustin said, 'We are closely monitoring the exchange rate, and we will be ready to correct any distortions.'
The Brazilian real has gained about 35% against the U.S. dollar so far in 2009, causing worries for exporters.
Augustin said Brazil's government will continue its policy of systematic purchases of U.S. dollars in order to build foreign reserves. 'This policy will continue, managed by the central bank,' he said.
Brazil's reserves stood at $238 billion at the end of November, up $5 billion from the previous month.
-By Rogerio Jelmayer, Dow Jones Newswires; 55-11-2847-4519; brazil@dowjones.com"
SAO PAULO (Dow Jones)--Brazil's government likely will issue another overseas bond before the end of the year, Treasury Secretary Arno Augustin said Friday.
'We are looking to build a better yield curve and improve the quality of our debt management,' Augustin said in a telephone interview.
He said the bond likely would be denominated in U.S. dollars and carry a 10-year term. He said it was possible the government would reopen its 2019 bond. He didn't offer any idea about the size of the offer.
Augustin said the government was also studying a possible overseas bond denominated in the Brazilian real. 'This is on our agenda,' he said. 'However, it is not likely for the short term since rates for dollar-denominated bonds are so good right now. A real-denominated issue is possible in 2010.'
Brazil has accessed the international debt market four times this year. In January, Brazil issued $1.025 billion in global bonds due in 2019. The bonds were sold at a yield of 6.127%. In May, it reopened the operation, raising another $750 million at a yield of 5.8%.
In July, the treasury obtained $525 million from the issue of an overseas bond due in 2037, with a yield of 6.45%. At the end of September, it raised $1.27 billion with the issue of a global bond due 2041, with a yield of 5.8%.
In the September operation, the government took advantage of a sovereign upgrade by Moody's, tapping the international bond market to fill out its debt curve.
In September, Moody's Investors Service raised Brazil's sovereign credit rating to Baa3, an investment-grade rating, more than a year after Standard & Poor's and Fitch Rating did so.
Brazil has issued real-denominated bonds overseas before, most recently in May 2008. At that time, it raised 750 million Brazilian reals ($441 million) from the reopening of an existing 2028 bond.
'Given the current international environment of low interest rates, Brazil's government will continue its policy of repurchasing overseas debt,' Augustin said.
In 2008, Brazil repurchased overseas bonds with total face value of $1.2 billion.
'We would like to buy more, but investors seem like they want to hold on to their Brazilian paper,' Augustin said.
The treasury secretary said Brazil's government will release its annual domestic debt management plan at the beginning of 2010. 'I can already tell you at least one thing about the plan,' Augustin said. 'We will aim to reduce the debt-to-GDP ratio next year.'
The debt-to-GDP ratio was 44.8% as of Oct. 31, up from 36.0% at the end of 2008. Brazil's public sector debt rose this year because of the global recession, which caused a decline in tax revenue.
But Brazil's economy is expected to rebound in 2010. Most economists are expecting growth of 5% next year after an expansion of no more than 1% for 2009.
Regarding Brazil's volatile foreign exchange market, Augustin said, 'We are closely monitoring the exchange rate, and we will be ready to correct any distortions.'
The Brazilian real has gained about 35% against the U.S. dollar so far in 2009, causing worries for exporters.
Augustin said Brazil's government will continue its policy of systematic purchases of U.S. dollars in order to build foreign reserves. 'This policy will continue, managed by the central bank,' he said.
Brazil's reserves stood at $238 billion at the end of November, up $5 billion from the previous month.
-By Rogerio Jelmayer, Dow Jones Newswires; 55-11-2847-4519; brazil@dowjones.com"
Friday, November 20, 2009
Brazil May Allow Some Funds to Invest 100% Overseas, Folha Says - Bloomberg.com
Brazil May Allow Some Funds to Invest 100% Overseas, Folha Says
Nov. 20 (Bloomberg) -- Brazil’s government may allow so- called multimarket funds to invest entirely in overseas assets, eliminating a 20 percent limit on foreign holdings to help curb the appreciation of the real, Folha de S. Paulo reported, without saying where it got the information.
Multimarket funds are for high-risk investors and can hold fixed-income assets, currency, gold, shares, options and other financial instruments, Folha said.
Finance Ministry spokeswoman Patricia Mesquita declined to comment when contacted by Bloomberg News today.
To contact the reporter on this story: Laura Price in London at lprice3@bloomberg.net
Last Updated: November 20, 2009 05:54 EST"
Nov. 20 (Bloomberg) -- Brazil’s government may allow so- called multimarket funds to invest entirely in overseas assets, eliminating a 20 percent limit on foreign holdings to help curb the appreciation of the real, Folha de S. Paulo reported, without saying where it got the information.
Multimarket funds are for high-risk investors and can hold fixed-income assets, currency, gold, shares, options and other financial instruments, Folha said.
Finance Ministry spokeswoman Patricia Mesquita declined to comment when contacted by Bloomberg News today.
To contact the reporter on this story: Laura Price in London at lprice3@bloomberg.net
Last Updated: November 20, 2009 05:54 EST"
Thursday, November 19, 2009
Brazil Increase of IOF ‘Should Not Be Ruled Out,’ JPMorgan Says - Bloomberg.com
Brazil Increase of IOF ‘Should Not Be Ruled Out,’ JPMorgan Says
Nov. 19 (Bloomberg) -- Brazil’s so-called IOF tax on the purchase of equity and fixed-income assets by foreigners may be expanded further to fight an appreciation in the currency, JPMorgan Chase & Co. said.
The extension of the tax to the creation of new depositary receipts, announced yesterday, shows that the IOF remains the key instrument to fight the real’s appreciation, and therefore IOF brackets that are higher or broader in scope should not be ruled out, wrote Sao Paulo-based Julio C. Callegari in a note.
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Last Updated: November 19, 2009 07:31 EST"
Nov. 19 (Bloomberg) -- Brazil’s so-called IOF tax on the purchase of equity and fixed-income assets by foreigners may be expanded further to fight an appreciation in the currency, JPMorgan Chase & Co. said.
The extension of the tax to the creation of new depositary receipts, announced yesterday, shows that the IOF remains the key instrument to fight the real’s appreciation, and therefore IOF brackets that are higher or broader in scope should not be ruled out, wrote Sao Paulo-based Julio C. Callegari in a note.
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Last Updated: November 19, 2009 07:31 EST"
Monday, November 16, 2009
Brazil Real 7.2% Undervalued Even After Rally, BofA Says
Nov. 16 (Bloomberg) -- Brazil’s real, the best- performing major currency this year, is undervalued by 7.2 percent against the dollar based on the nation’s rising exports and higher savings, Bank of America Corp. said.
Emerging-market currencies are “broadly undervalued” against the dollar, with Latin America the most undervalued region in the world, Bank of America strategists wrote in a note to clients.
The Brazilian currency, which has gained 35 percent this year, rose 0.6 percent to 1.7126 against the dollar at 11:22 a.m. New York time. The real should appreciate to 1.60 per dollar in two to three years, Benoit Anne, the London-based head of emerging market foreign-currency and debt strategy at Bank of America, said by phone today.
“In nominal terms, the real is still undervalued,” Anne said, citing an improving current account and excess savings. “We think the real should strengthen over the long term based on our model.”
... more: Brazil Real 7.2% Undervalued Even After Rally, BofA Says
Emerging-market currencies are “broadly undervalued” against the dollar, with Latin America the most undervalued region in the world, Bank of America strategists wrote in a note to clients.
The Brazilian currency, which has gained 35 percent this year, rose 0.6 percent to 1.7126 against the dollar at 11:22 a.m. New York time. The real should appreciate to 1.60 per dollar in two to three years, Benoit Anne, the London-based head of emerging market foreign-currency and debt strategy at Bank of America, said by phone today.
“In nominal terms, the real is still undervalued,” Anne said, citing an improving current account and excess savings. “We think the real should strengthen over the long term based on our model.”
... more: Brazil Real 7.2% Undervalued Even After Rally, BofA Says
Friday, November 13, 2009
Dollar Overwhelms Central Banks From Brazil to Korea (Update1) - Bloomberg.com
By Oliver Biggadike and Matthew Brown
Nov. 13 (Bloomberg) -- Brazil, South Korea and Russia are losing the battle among developing nations to reduce gains in their currencies and keep exports competitive as the demand for their financial assets, driven by the slumping dollar, is proving more than central banks can handle."...
‘Suffered Tremendously’
Brazil’s real is up 1.6 percent this month, even after imposing a tax in October on foreign stock and bond investments and increasing foreign reserves by $9.5 billion in October in an effort to curb the currency’s appreciation. The real has risen 33 percent this year.
“We have to be careful that our exchange rate doesn’t appreciate too much as to deindustrialize the country,” Marcos Verissimo, chief of staff at Brazil’s state development bank known as BNDES, said yesterday at a conference in Sao Paulo. “The capital goods industry has suffered tremendously.”....
“The dollar is weakening because the U.S. has the lowest short-term interest rates in the world will be the sell side of the carry trade as long as that remains true,” Chris Low, chief economist at FTN Financial in New York, wrote in a note to clients yesterday.....
‘Hard to Fight’
Brazil’s economy emerged from a recession in the second quarter, swinging to a 1.9 percent expansion after six months of contraction, a Sept. 11 report from the statistics agency showed. Six straight months of job growth, coupled with tax breaks and record low borrowing costs, pushed up consumer spending and helped Latin America’s largest economy rebound from the global financial crisis.
“I hear a lot of noise reflecting the government’s discomfort with the exchange rate, but it is hard to fight this,” said Rodrigo Azevedo, the monetary policy director of Brazil’s central bank from 2004 to 2007. “There is very little Brazil can do,” said Azevedo, who runs $1.8 billion at JGP SA in Rio de Janeiro, in an Oct. 16 interview.
To contact the reporter on this story:
Oliver Biggadike in New York at obiggadike@bloomberg.net
Matthew Brown in London at brown42@bloomberg.net
Last Updated: November 13, 2009 01:34 EST
Dollar Overwhelms Central Banks From Brazil to Korea
Nov. 13 (Bloomberg) -- Brazil, South Korea and Russia are losing the battle among developing nations to reduce gains in their currencies and keep exports competitive as the demand for their financial assets, driven by the slumping dollar, is proving more than central banks can handle."...
‘Suffered Tremendously’
Brazil’s real is up 1.6 percent this month, even after imposing a tax in October on foreign stock and bond investments and increasing foreign reserves by $9.5 billion in October in an effort to curb the currency’s appreciation. The real has risen 33 percent this year.
“We have to be careful that our exchange rate doesn’t appreciate too much as to deindustrialize the country,” Marcos Verissimo, chief of staff at Brazil’s state development bank known as BNDES, said yesterday at a conference in Sao Paulo. “The capital goods industry has suffered tremendously.”....
“The dollar is weakening because the U.S. has the lowest short-term interest rates in the world will be the sell side of the carry trade as long as that remains true,” Chris Low, chief economist at FTN Financial in New York, wrote in a note to clients yesterday.....
‘Hard to Fight’
Brazil’s economy emerged from a recession in the second quarter, swinging to a 1.9 percent expansion after six months of contraction, a Sept. 11 report from the statistics agency showed. Six straight months of job growth, coupled with tax breaks and record low borrowing costs, pushed up consumer spending and helped Latin America’s largest economy rebound from the global financial crisis.
“I hear a lot of noise reflecting the government’s discomfort with the exchange rate, but it is hard to fight this,” said Rodrigo Azevedo, the monetary policy director of Brazil’s central bank from 2004 to 2007. “There is very little Brazil can do,” said Azevedo, who runs $1.8 billion at JGP SA in Rio de Janeiro, in an Oct. 16 interview.
To contact the reporter on this story:
Oliver Biggadike in New York at obiggadike@bloomberg.net
Matthew Brown in London at brown42@bloomberg.net
Last Updated: November 13, 2009 01:34 EST
Dollar Overwhelms Central Banks From Brazil to Korea
View Waldemar Jezler's profile
Thursday, November 12, 2009
Brazil Currency Specialist to Join Finance Ministry, Valor Says
Nov. 12 (Bloomberg) -- Economist Emilio Garofalo Filho left the Brazilian central bank to work at the Finance Ministry, Valor Economico reported, without saying where it got the information.
Finance Minister Guido Mantega invited Garofalo, 56, to help design policies to contain the local currency’s appreciation against the dollar, according to the newspaper.
Calls by Bloomberg News to the Finance Ministry and the central bank weren’t answered before regular business hours.
To contact the reporter responsible for this story:
Camila Fontana in Sao Paulo at cfontana@bloomberg.net
Last Updated: November 12, 2009 04:51 EST
Brazil Currency Specialist to Join Finance Ministry, Valor Says
Finance Minister Guido Mantega invited Garofalo, 56, to help design policies to contain the local currency’s appreciation against the dollar, according to the newspaper.
Calls by Bloomberg News to the Finance Ministry and the central bank weren’t answered before regular business hours.
To contact the reporter responsible for this story:
Camila Fontana in Sao Paulo at cfontana@bloomberg.net
Last Updated: November 12, 2009 04:51 EST
Brazil Currency Specialist to Join Finance Ministry, Valor Says
Wednesday, November 11, 2009
Brazil Real May Rally 10% to 10-Year High: Technical Analysis
Nov. 11 (Bloomberg) -- Brazil’s real, the best-performing major currency in the world this year, may rally 10 percent to a 10-year high because government measures aren’t enough to stem gains, said Phil Roberts, a technical analyst at Barclays Plc.
The real will take out a decade high of 1.5545 per dollar reached in August 2008, a month before global credit markets seized up, Roberts said. He said that should the real begin to falter and decline to 1.7810 per dollar, it would signal that the rally that began in March would be ending.
The real has climbed 35 percent this year, more than all currencies Bloomberg tracks against the dollar after the Seychelles rupee. The real weakened 0.3 percent today to 1.7175 per dollar at 11:16 a.m. in New York.
This rally is “not over,” Roberts said in an interview from London. “Attempts to stop the appreciation of the real will have to be stronger.” ....
more: Brazil Real May Rally 10% to 10-Year High: Technical Analysis
To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net
Last Updated: November 11, 2009 11:32 EST
The real will take out a decade high of 1.5545 per dollar reached in August 2008, a month before global credit markets seized up, Roberts said. He said that should the real begin to falter and decline to 1.7810 per dollar, it would signal that the rally that began in March would be ending.
The real has climbed 35 percent this year, more than all currencies Bloomberg tracks against the dollar after the Seychelles rupee. The real weakened 0.3 percent today to 1.7175 per dollar at 11:16 a.m. in New York.
This rally is “not over,” Roberts said in an interview from London. “Attempts to stop the appreciation of the real will have to be stronger.” ....
more: Brazil Real May Rally 10% to 10-Year High: Technical Analysis
To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net
Last Updated: November 11, 2009 11:32 EST
Tuesday, November 10, 2009
Brazil Investigating Investment Tax Loopholes, Estado Reports
Nov. 10 (Bloomberg) -- Brazil’s Finance Ministry is investigating possible loopholes used by investors to avoid paying a new tax on foreign purchases of stocks and bonds, O Estado de Sao Paulo reported, citing an interview with a government official who declined to be identified.
The Finance Ministry is inclined to raise the tax rate from 2 percent and at the same time to eliminate the tax on purchases of stocks in initial public offerings, the person told Estado.
The Finance Ministry press office didn’t immediately return calls by Bloomberg News seeking comment.
To contact the reporter responsible for this story: Camila Fontana at cfontana@bloomberg.net
Last Updated: November 10, 2009 05:02 EST
Brazil Investigating Investment Tax Loopholes, Estado Reports - Bloomberg.com
The Finance Ministry is inclined to raise the tax rate from 2 percent and at the same time to eliminate the tax on purchases of stocks in initial public offerings, the person told Estado.
The Finance Ministry press office didn’t immediately return calls by Bloomberg News seeking comment.
To contact the reporter responsible for this story: Camila Fontana at cfontana@bloomberg.net
Last Updated: November 10, 2009 05:02 EST
Brazil Investigating Investment Tax Loopholes, Estado Reports - Bloomberg.com
Friday, November 6, 2009
Brazil May Exempt IPOs From Foreign Inflow Tax, Estado Reports
Nov. 6 (Bloomberg) -- Brazil’s Finance Minister Guido Mantega may exempt initial public offerings from a new 2 percent tax on foreign inflows while increasing the levy on other transactions, Estado reported, without saying how it got the information.
An increase in the inflow tax may be applied to other kinds of transactions in a bid to stem the real’s rally against the dollar, the Sao Paulo-based newspaper reported.
The Finance Ministry didn’t immediately return calls by Bloomberg News seeking comment.
To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net
Last Updated: November 6, 2009 07:14 EST
Brazil May Exempt IPOs From Foreign Inflow Tax, Estado Reports - Bloomberg.com
An increase in the inflow tax may be applied to other kinds of transactions in a bid to stem the real’s rally against the dollar, the Sao Paulo-based newspaper reported.
The Finance Ministry didn’t immediately return calls by Bloomberg News seeking comment.
To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net
Last Updated: November 6, 2009 07:14 EST
Brazil May Exempt IPOs From Foreign Inflow Tax, Estado Reports - Bloomberg.com
Thursday, November 5, 2009
Brazil to Propose Measures on Exchange Rates at G20, Folha Says
By Andre Soliani
Nov. 5 (Bloomberg) -- Brazil will propose to the Group of 20 countries measures to avoid overvaluation of the Brazilian, Australian, New Zealander and South African currencies against the U.S. dollar and the Chinese yuan, Folha de Sao Paulo reported, citing Finance Minister Guido Mantega. Mantega told the Sao Paulo-based newspaper that investors are shifting money to commodity exporting economies because rich nations are paying low interest rates.
The government’s 2 percent tax on foreign purchases of fixed income securities and equities is helping contain stock and currency gains, Folha reported Mantega as saying.
To contact the reporter on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net
Last Updated: November 5, 2009 07:08 EST
Brazil to Propose Measures on Exchange Rates at G20, Folha Says - Bloomberg.com
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