Brazil’s swap rates dropped after a report showed the nation’s economy contracted more than forecast in December, adding to speculation that the central bank will limit further increases in borrowing costs.
Swap rates on contracts maturing in January 2015 declined five basis points, or 0.05 percentage point, to 11.33 percent at 10:05 a.m. in Sao Paulo and were down the same amount this week. The real appreciated 0.3 percent to 2.3870 per U.S. dollar and has lost 0.4 percent since Feb. 7.
The central bank reported today that the seasonally adjusted economic activity index, a proxy for gross domestic product, fell 1.35 percent in December from a month earlier, compared with a 1.2 percent reduction forecast by analysts surveyed by Bloomberg. Policy makers have raised the target lending rate by 3.25 percentage points to 10.5 percent since April to curb inflation.
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