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Brazil's Real Falls as Voter Polls Show Runoff Too Close to Call

Friday, 10 Oct 2014 09:47 AM

Oct. 10 (Bloomberg) -- Brazil’s real dropped as voter polls indicated the runoff between President Dilma Rousseff and Senator Aecio Neves is too close to call, dimming speculation that a new government will restore growth.

The real fell 0.7 percent to 2.4170 per dollar at 9:21 a.m. in Sao Paulo, the worst performance among 24 developing-nation currencies tracked by Bloomberg after the Russian ruble. The real was still up 1.7 percent for the week in its first five-day advance since August.

One-month implied volatility on options for the real, reflecting projected shifts in the currency, increased today to a one-year high of 25 percent as the Oct. 26 runoff approached. The real also dropped today as concern Europe’s economy will struggle to grow sank demand for higher-yielding assets.

“The markets were anticipating that Neves would be some 10 points ahead of Rousseff, but they were in fact tied,” Joao Paulo de Gracia Correa, a currency trader at Correparti Corretora de Cambio in Curitiba, Brazil, said in a telephone interview. “Concern over the health of the European economy is drying up demand for riskier assets.”

Neves garnered 46 percent support compared with 44 percent for Rousseff in an Oct. 7-8 Ibope poll, indicating a difference that is within the margin of error of plus or minus two percentage points.

As the International Monetary Fund’s annual meeting in Washington began, European Central Bank President Mario Draghi pledged anew to loosen monetary policy more if needed and called on those governments with the room to ease fiscal policy to do so. By contrast, German Finance Minister Wolfgang Schaeuble warned against quantitative easing and urged continued budgetary discipline.

Brazil’s swap rates, a gauge of expectations for changes in borrowing costs, rose 0.07 percentage point to 11.93 percent today on the contract due in January 2016.


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Oct. 10 (Bloomberg) -- Brazil's real dropped as voter polls indicated the runoff between President Dilma Rousseff and Senator Aecio Neves is too close to call, dimming speculation that a new government will restore growth.The real fell 0.7 percent to 2.4170 per dollar at...
brazil, elections, close
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2014-47-10
Friday, 10 Oct 2014 09:47 AM
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