Category: Brazil

Rodrigo Azevado, the monetary policy director of Brazil’s central bank, said the bank may resume selling reais for dollars. The comments boosted speculation the government will act to brake the real’s 32 percent, 12-month rally as economic growth falters and exporters complain their goods are becoming less competitive in international markets.

Brazil’s economy grew 2.9 percent in the first quarter, the slowest pace in five quarters as higher interest rates discouraged consumer spending and a stronger currency slowed exports. The figure suggests the economy will slump more than the government and economists expected after the central bank raised the benchmark lending rate every month since September to fight inflation.

Brazilian economists cut their year-end inflation forecast for a second straight week on the prospect of slower economic growth. Inflation this year will fall to 6.35 percent, down from 8 percent predicted in April, according to economists surveyed by the central bank. The central bank lifted the overnight lending rate for a ninth straight month in May to 19.75 percent.

Brazil’s real gained for a fourth day in five on expectations that increased bond sales abroad and rising export revenue will boost inflows into South America’s largest economy. The real rose to 2.37 per dollar, its highest level in more than three years after the government and Brazilian companies last week sold almost $1 billion in bonds, tapping into a two-month rally in emerging-market debt that cut borrowing costs.

Japan’s Prime Minister Junichiro Koizumi and Brazil’s President Luiz Inácio Lula da Silva confirmed their mutual support for permanent membership of the United Nations Security Council. Brazil, Japan, Germany and India are all seeking permanent seats on the security council and on May 16 proposed six new permanent members — two from Africa, two from Asia, one from Latin America and one from Western Europe.

Brazil’s Senate confirmed the nomination of Alexandre Tombini to the board of the Central Bank. Tombini, one of the developers of the Inflation Target System in 1999, is a career official at the Central Bank and has served at the Brazilian Executive Office at the IMF for the last few years. The quick and broad-based confirmation of Tombini´s nomination was welcomed by many foreign observers as well as political and economic leaders in Brazil.

Brazil’s central bank raised its benchmark interest rate another 25 basis points to 19.75 percent, the ninth hike since last September. Inflation in Brazil accelerated .87 percent in April as prices for food, bus fares and medicine increased. The central bank will next meet in mid-June to set the benchmark rate.

Brazil’s Embraer, the world’s fourth-biggest aircraft producer, posted a net profit of $89 million in the first quarter, up 21 percent from a year earlier. The company’s revenue grew by 12 percent to $774 million. Embraer reported firm orders of $ 9.9 billion in the first quarter and delivered 30 aircraft.

Sabesp, Brazil’s largest water utility, reported first-quarter net profits of $61 million, up 31 percent year-on-year. Revenue came in at $468 million and Ebitda was $22 million, both up 7 percent. Sabesp operates in São Paulo, Brazil’s wealthiest and most populous state.