The Brazilian real firmed against the U.S. dollar in early New York deals on Wednesday, as traders expect the Central bank of Brazil to hike interest rate at its monetary policy decision, due later in the day.
Economists are forecasting a 50 basis points increase in rate to 14.250 percent, from the present 13.750 percent, to arrest inflation.
The Brazilian real fell sharply on Tuesday after Standard & Poor’s downgraded its Brazil’s credit rating outlook to ‘negative’ citing challenging political and economic circumstances.
The ‘negative’ outlook reflects a greater than one-in-three likelihood that the policy correction will face further slippage given fluid political dynamics and that the return to a firmer growth trajectory will take longer than expected.
The Brazilian currency advanced to a 2-day high of 3.3371 versus the greenback, up by 3.2 percent from Tuesday’s record low of 3.4475. The pair ended deals at 3.3560 yesterday.
The material has been provided by InstaForex Company – www.instaforex.com