Brazil’s real tumbled the most in 15 months after Finance Minister Guido Mantega said a weaker currency was good for local industry, deepening a selloff sparked by concern the U.S. will curb monetary stimulus.
The real depreciated 2.2 percent to 2.3925 per dollar at the close of trading in Sao Paulo, the worst performance among all currencies tracked by Bloomberg. The real lost 5 percent this week. Swap rates on the contract due in January 2015 rose 27 basis points, or 0.27 percentage point, to 10.33 percent.
Brazil’s currency has lost 15 percent in the past three months, boosting the cost of imports and adding to inflation that already exceeds central bank targets. The exchange rate is at a level that’s good for local industry, Mantega told reporters in Sao Paulo today. The currency will be volatile until U.S. policy makers clarify their plans for paring back an $85 billion a month bond-buying program, he said.
“If he says it’s at a good level, that means the price of the dollar will only rise,” Jose Carlos Amado, a currency trader at Renascenca Corretora, said by phone from Sao Paulo. “No one knows the parameters for the real’s value after the Fed reduces stimulus.”