Brazil’s swap rates climbed as Finance Minister Guido Mantega said the government won’t allow the real to over-appreciate, boosting speculation policy makers will raise borrowing costs to control inflation.
The currency erased gains today after the central bank announced reverse currency swaps to limit its advance. Policy makers have allowed the real to strengthen 4.9 percent this year, the most among 25 emerging-market currencies. The annual inflation rate has exceeded the 4.5 percent midpoint of the central bank’s target range for more than two years.
Swap rates due in January 2014 rose 14 basis points, or 0.14 percentage point, to 7.53 percent at 10:44 a.m. in Sao Paulo, the biggest increase on a closing basis since June 4. The real was little changed at 1.9568 per dollar after rallying to a nine-month intraday high. The currency has gained 0.9 percent since Feb. 8 in what would be its fourth weekly advance.
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