By Gerald Jeffris
BRASILIA--Brazil's real slipped against the dollar to end slightly
weaker Monday as uncertainties abroad continued to command investors'
attention.
The real exited regular trading at BRL2.0313 to the dollar after
ending at BRL2.0293 to the dollar Friday, according to Tullett Prebon
via Factset.
Traders noted the currency began the day on a weakening trend as
investors focused on continued talks in Europe over the possible use
of the region's financial stability facility for directly purchasing
the sovereign debt of some troubled European economies.
Investors also maintained some caution over the outlook for China,
whose decelerating growth is seen possibly affecting other
emerging-market economies such as Brazil.
"An intensification of the global crisis beyond expectations doesn't
bring optimism about investment flows here, as aside from providing
lower liquidity and reassurance for investors, low growth also affects
the attractiveness of the economy," said analyst Sidnei Nehme at the
NGO brokerage in Sao Paulo.
Movements in Brazil's currency market remained subdued Monday,
however, as a holiday in the country's main financial hub, Sao Paulo,
limited trading beyond over-the-counter operations.
Locally, meanwhile, attentions remained focused on the Brazilian
central bank's upcoming interest rate committee meeting and whether
the bank will opt to cut the benchmark Selic interest rate.
The monetary authority is widely expected to trim the rate another
half percentage point at the meeting to stimulate a still-sluggish
economy. The bank has cut the rate by four percentage points since
August to 8.5%.
The latest data Monday, however, left some doubts on how comfortable
the bank might be with rate easing ahead. Brazil's Getulio Vargas
Foundation reported the country's IPG-M general price index, a key
measure of wholesale prices, accelerated 0.95% in late June compared
with a 0.68% increase the previous month. The figure brought the
12-month rate for the index to 6.27%.
However, analysts pointed out that the acceleration came mostly in
reaction to increases in volatile food and energy costs, which could
subside in the future.
Meanwhile, according to a weekly market survey released by the central
bank Monday, the Selic rate is seen continuing its decline through the
end of 2012 to 7.5%.
In the same survey, analysts maintained their forecast for the real at
year's end at BRL1.95 to the dollar.
Write to Gerald Jeffris at gerald.jeffris@dowjones.com
(END) Dow Jones Newswires
July 09, 2012 16:30 ET (20:30 GMT)
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