Saturday, 19 September 2015 00:49
SAO PAULO: The Brazilian real fell to a 13-year low on Friday as political and economic problems at home outweighed bets that the US Federal Reserve may still take a while to raise interest rates.
The real dropped to as much as 3.93 per dollar, its weakest level since October 2002, as investors fretted about a domestic political crisis that is hampering President Dilma Rousseff’s ability to approve crucial austerity measures.
It last traded at 3.92 per dollar, 1 percent weaker on the day, while the Mexican peso gained 0.3 percent. Other key Latin American currencies were steady.
Many emerging market currencies have been strengthening
since the Fed kept interest rates unchanged on Thursday, supporting appetite for risk globally. Doubts about whether the Fed would raise rates this year continued to rise on Friday.
In Brazil, however, investors saw no end to a political crisis that has included calls for the impeachment of Rousseff. They fear that, as a result of the crisis, other ratings agencies could downgrade the country to junk, following in the footsteps of Standard & Poor’s.
“A weaker dollar could bring some relief to the real, but the political noise should keep markets jittery and volatile here,” said Joao Paulo de Gracia Correa, a trader with SLW brokerage in Brazil.
