Brazil Spends $17 Billion in Reserves to Lift Cratering Real

Bloomberg12-20 22:41

(Bloomberg) -- Brazilian markets bounced at the end of the week amid extraordinary central bank moves to curb a selloff in the currency that was spreading across the nation’s markets. The real gained...

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Brazil’s dollar bonds were among the best performers in emerging markets Friday, and the nation’s five-year credit-default swaps fell.The moves helped stem the speed of the declines, though investors are still wary of the path ahead for the real, whose 20% slide this year makes it the worst performing major currency in the world. Brazilian equities have also been among the worst performers globally, sending one valuation measure to the lowest relative to the emerging-market benchmark in almost 20 years.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","BK4588":"碎股","LU0158827781.USD":" ALLIANZ GLOBAL SUSTAINABILITY \"AT\" (USD) ACC","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","LU0106831901.USD":"贝莱德世界金融基金A2","LU0795875086.SGD":"JPMorgan Investment Funds - Global Income A (div) SGD","LU2347655156.SGD":"JPMorgan Investment Funds - Global Income A (icdiv) SGD-H","LU0314104364.USD":"MANULIFE GF AMERICAN GROWTH \"AA\" (USD) INC","LU0006306889.USD":"SCHRODER ISF US LARGE CAP \"A\" (USD) INC AV","LU2023251221.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"AM\" (USD) INC","MS":"摩根士丹利","GS":"高盛","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","BK4581":"高盛持仓","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","BK4504":"桥水持仓","LU0106261372.USD":"SCHRODER ISF US LARGE CAP \"A\" ACC","LU0225283273.USD":"SCHRODER ISF GLOBAL EQUITY ALPHA \"A\" (USD) ACC","LU0971096721.USD":"富达环球金融服务 A","LU2089283258.USD":"安联环球可持续基金Cl AM Dis","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","BK4127":"投资银行业与经纪业","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU2111349929.HKD":"ALLIANZ GLOBAL SUSTAINABILITY \"AM\" (HKD) INC","LU0795875169.SGD":"JPMorgan Investment Funds - Global Income A (div) SGD-H","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","BK4516":"特朗普概念","LU1732799900.SGD":"JPMorgan Investment Funds - Global Income A (irc) SGD-H","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU1548497426.USD":"安联环球人工智能AT Acc","LU2271345857.HKD":"ALLIANZ GLOBAL SUSTAINABILITY \"AT\" (HKD) ACC","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","LU0912757837.SGD":"JPMorgan Investment Funds - Global Income A (mth) SGD-H","BK4534":"瑞士信贷持仓","BK4585":"ETF&股票定投概念","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","LU1732800096.USD":"摩根大通环球收益基金A (irc)","LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","LU2028103732.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"AMG\" (USD) INC","LU2089284900.SGD":"Allianz Global Sustainability Cl AM Dis H2-SGD","LU0267386448.USD":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC"},"translate_title":"巴西花费170亿美元储备来提振暴跌的雷亚尔","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"MS":0.9,"GS":0.9},"content_text":"(Bloomberg) -- Brazilian markets bounced at the end of the week amid extraordinary central bank moves to curb a selloff in the currency that was spreading across the nation’s markets. \nThe real gained as much as 1.4% on Friday, briefly erasing weekly losses, after policymakers stepped in again with both a spot sale and a credit line auction totaling a combined $7 billion. Brazil’s dollar bonds were among the best performers in emerging markets Friday, and the nation’s five-year credit-default swaps fell.\nThe reprieve comes after the central bank stepped in almost every day for the past week to try to meet a surge in demand for US dollars. It sold $8 billion in back-to-back spot auctions on Thursday alone in the biggest daily sale of greenbacks since at least 1999. They’ve spent about $17 billion in spot sales so far. \nThe moves helped stem the speed of the declines, though investors are still wary of the path ahead for the real, whose 20% slide this year makes it the worst performing major currency in the world. Brazilian equities have also been among the worst performers globally, sending one valuation measure to the lowest relative to the emerging-market benchmark in almost 20 years. \nInvestors have rushed to dump Brazilian assets amid growing concerns over the country’s deteriorating fiscal outlook. The selloff that sent the real plunging to a record low spread to other asset classes — from stocks to local-currency debt to dollar bonds — with traders even piling into hedges against a sovereign default. \n“The lack of fiscal credibility is the original sin of the current market rout in Brazil,” said Patrick Esteruelas, head of research at EMSO Asset Management. “It seems difficult to catch this falling knife until they anchor the fiscal, growth cools or the market starts to think about a change of leadership.”\nBrazil is running an annual budget gap of 10% — far wider than the ones seen during the leftist President Luiz Inacio Lula da Silva’s first administration. A highly anticipated spending cut plan presented last month fell well short of expectations, boosting concerns about the fiscal outlook. The package was watered down even further in Congress this week. \nTaking Action\nThe selloff in Brazil comes as emerging markets as a whole face a challenging backdrop. Investors expect Donald Trump’s policies to keep the dollar strong and fan inflation, likely derailing monetary easing. This week, the Federal Reserve reined in the number of cuts they expect in 2025, signaling greater caution over how quickly they can continue reducing borrowing costs.\nThe prospects of a strong greenback have pushed EM central banks into action. Policymakers in South Korea, Philippines and Hungary all moved to stabilize markets amid currency drops. \nFiscal dominance \nBrazil’s economy has continued to grow, with unemployment at near record lows and wages gaining. Lula has capitalized on growth to evidence he’s delivering on his promises to better the lives of lower-income Brazilians. \nBut market watchers have shown concern that the economy may be overheating, with inflation expectations having significantly worsened. The central bank raised rates by a full percentage point to 12.25% last week, and pledged to raise borrowing costs to 14.25% by March to try to stem the deterioration. \nIt has done little to keep rates from selling off, with traders already betting the Selic will peak at more than 16% and raising doubts about the effectiveness of monetary policy. \nA growing chorus of Brazil watchers, from veteran investor Luis Stuhlberger and former central banker Arminio Fraga to Goldman Sachs and Morgan Stanley, is warning of the country falling into a trap in which fiscal expansion undercuts the impact of the central bank’s attempt to tighten policy with higher rates — a scenario known as fiscal dominance.\nDuring a press conference on Thursday, Gabriel Galipolo, who will take over the helm of the central bank in January, said the bank has the tools needed to tame inflation. Outgoing governor Roberto Campos Neto added that foreign-exchange interventions are not meant to set currency levels, nor battle investors perceptions of a worsening fiscal outlook.\nThe bank has “a lot” of reserves and will act “whenever” necessary, Campos Neto said. Officials have seen an “atypical” outflow in the last weeks of the year, he added. \nYet, investors and analysts say the impact of the moves may be short-lived. Brad Bechtel, global head of FX at Jefferies, called them a “band-aid fix.”\n“We know interventions don’t work, but buy some time,” said Gorky Urquieta, a portfolio manager at Neuberger Berman. “It will take decision and willingness, and that’s ultimately going to have to come from the president himself.”\n--With assistance from Walter Brandimarte.\n(Updates pricing starting in headline, adds context throughout)\n©2024 Bloomberg L.P.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"economic","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2492478464"}