Reuters: US Dollar Report: Brazil interest-rate futures, real jump on monetary tightening bets

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Brazil interest-rate futures, real jump on monetary tightening bets Oct 10th 2013, 12:46 Share this Email Print Reprints RIO DE JANEIRO | Thu Oct 10, 2013 8:46am EDT RIO DE JANEIRO Oct 10 (Reuters) - Brazil's interest-rate futures opened sharply higher on Thursday while the real rallied after the central bank signaled it is nowhere near ending a monetary tightening cycle that has driven up its benchmark Selic rate by 225 basis points since April. Interest-rate contracts maturing in January 2005 jumped 20 basis points after the central bank made no changes to a much-scrutinized statement that is always issued after its monetary policy decisions. The move was interpreted as a sign that the bank will keep its current pace of monetary tightening. The real gained 0.6 percent to 2.1924 per dollar as higher interest rates potentially boost the allure of Brazilian assets. Brazilian policymakers last night raised the Selic to 9.5 percent from 9.0 percent, and analysts now believe the rate will go up by another 50 basis points next month. The central bank's "statement gave no hint that the recent falls in inflation might prompt policymakers to slow the pace of tightening. A further hike to 10 percent looks all but guaranteed at the next central bank meeting at the end of November," Neil Shearing, chief emerging markets economist with London-based Capital Economics, wrote in a research note. In the statement, the central bank repeated the same language used after the past three monetary policy meetings, saying only that its board considers that the decision to raise the Selic by 50 basis points "will contribute to put inflation on a downward path and will ensure that this trend continues into the next year." Link this Share this Digg this Email Reprints

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