MARKETS: DI rates close higher despite USD auction

São Paulo, 13 - The one-day interbank deposit futures rates (DI rates) in Brazil ended higher despite a swap auction by the Central Bank has led the locally traded U.S. dollar down as the coronavirus-linked...

São Paulo, 13 - The one-day interbank deposit futures rates (DI rates) in Brazil ended higher despite a swap auction by the Central Bank has led the locally traded U.S. dollar down as the coronavirus-linked fears prevailed. According to Commcor Corretora analyst Cléber Alessie, the Central Bank's performance helped to calm down the foreign exchange market, which had been breaking historical record highs in the last few days. For him, the statements by the Minister of Economy, Paulo Guedes, who once again defended a higher FX rate, put pressure on local businesses, showing that the American currency's appreciation does not generate concern - at least not yet. Guedes said on the eve that it is better "four with four" - that is, the USD in the range of R$ 4.00 and Selic in the range of 4% - than the interest rate at 14% and the American dollar at R$ 1.80. After all, "everyone was going to Disneyland," even "a housekeeper," said the minister. "That triggered some political noise," says Quantitas Asset fixed income trader Matheus Gallina. As a result, investors were testing new levels of the USD, which rose to the new historical high above R$ 4.38, which ended up triggering a traditional foreign exchange swap auction by the Central Bank. Despite the fall of the locally traded U.S. dollar after the auction, the forward curve maintained its upward trend, recomposing yields amid concerns about the pass-through of inflation and the fear of coronavirus. "The U.S. dollar auction was large and threw water on the fire, but the catch is the coronavirus outbreak, which gives the DI rates another direction, other than the fall," noticed a local bank's derivatives trader. The January 2021 DI contract rate settled at 4.260%, from 4.225% in the previous settlement. The January 2022 contract was at 4.83%, from 4.79%. The January 2023 contract ended at 5.41%, from 5.37%, while the January 2025 contract closed at 6.08%, from 6.03%. Olívia Bulla / Agência CMA Translation by Ricardo Gozzi http://www.agenciacma.com.br/esp/



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MARKETS: DI rates close higher despite USD auction

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