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Monday, September 21, 2015

Brasilian Real Eyes New Record Low

Brazilian real eyes new record low

Less than R$0.02 is all that separate the Brazilian real from a new record low.
The currency - which has already shed a third of its value against the dollar this year - sank another 1 per cent in the minutes after the markets opened on Monday in Brazil to R$3.9847 as the gloom over Latin America's largest economy shows little sign of letting up.
The dive puts the real within a hair of the all time low of R$4.0040 reached in October 2002.
Support for the real has all but collapsed in recent weeks after Standard & Poor's downgraded the country's credit rating to junk and growing political infighting cast doubt on the ability of president Dilma Rousseff to rein in the budget deficit.
In a sign of how much sentiment for Brazilian assets have soured, not even the US Federal Reserve's decision last week to hold interest rates at record lows managed to offer the real any temporarily reprieve.
According to the latest weekly central bank survey of private economists, Brazil is now expected to contract 2.7 per cent this year and 0.8 per cent next year as falling commodity prices, mounting unemployment and high interest rates continuing to take the life out of the economy.
Analysts at Societe Generale reckon breaching the R$4 mark could just be the start. They are forecasting the currency to sink as low as R$4.4 per dollar in the weeks ahead as international investors rush to cut their exposure to Brazil