Reuters: US Dollar Report: UPDATE 2-Brazil current account gap wider on weaker trade surplus

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 2-Brazil current account gap wider on weaker trade surplus Oct 23rd 2012, 14:36 Tue Oct 23, 2012 10:36am EDT * Brazil posts larger-than-expected $2.6 bln c/a deficit * Foreign direct investment falls to $4.4 bln in Sept * Cbank sees FDI rebounding to $6 bln in October By Alonso Soto and Tiago Pariz BRASILIA, Oct 23 (Reuters) - Brazil's current account deficit widened in September from a year ago as a weakening global economy drags down exports from the South American nation, central bank data showed on Tuesday. Brazil had a current account deficit of $2.596 billion in September, stable from the gap posted in August, but above the $2.45 billion median forecast of analysts surveyed by Reuters. Brazil's current account deficit, a broad measure of a country's foreign transactions including trade in goods and services but also profit remittances and interest payments, in September of last year was $2.234 billion. "The current account remains well anchored: the erosion in the trade balance in the year to date has been more than offset by the decline in net remittances of profits and dividends," Alberto Ramos, chief Latin America economist for Goldman Sachs, said in a research note. The repatriation of profits abroad was only $1.1 billion in September, down from $1.9 billion in September of last year and $2.5 billion in August. The fall in remittances reflects the drop in profits by foreign companies operating in Brazil as both the local and global economy struggle to recover. A strong flow of foreign investment in Brazil despite the weak global economy has so far helped cover the country's current account gap this year. Foreign direct investment in Latin America's largest economy was $4.393 billion in September, down from $5.03 billion in August and more than the expected $4 billion. The bank's head of economic research Tulio Maciel said he expects FDI to rise again to $6 billion in October based on preliminary data. President Dilma Rousseff's government efforts to open up public infrastructure concessions to private investors and major sporting events like the 2014 Soccer World Cup are expected to attract investors in coming years. Signs of a recovery in local economic activity is also expected to bring in more foreign capital. PORTFOLIO INVESTMENT SEEN UP Portfolio inflows, which along with FDI is part of the capital account, fell sharply to $983 million from $2.141 billion in August mostly due the sale of local shares. Brazil's benchmark Bovespa stock index has fallen about 16 percent since hitting the year's high in early March. Goldman Sachs' Ramos said the weak capital account numbers mirror the shift in foreign investors' sentiment as well as interventionist measures by the local government. Brazil has slapped taxes on some capital inflows as a way to keep the local currency, the real, from gaining too much. In the first nine months of the year, foreign investment in local shares tumbled to $2.89 billion from $5.95 billion in the same period last year. Foreign investment in local debt has remained mostly stable in that same period. Still, the bank's Maciel said preliminary data shows a strong recovery in foreign investment in local shares. Foreign investment in shares was up to $1.2 billion as of Oct. 19. Last month the central bank cut its 2012 current account deficit estimate to $53 billion from $56 billion. Earlier this month, the trade ministry reported that Brazil's trade surplus narrowed for the sixth straight month to $ 2.557 billion in September, as a slowing global economy undermined prices of the commodity powerhouse's key exports. The current account deficit in the 12 months through September was equal to 2.15 percent of the country's gross domestic product, the central bank said, up from a previously reported 2.12 percent in August. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions