MARKETS: DI rates close lower on USD, positive news

São Paulo, 12 - The one-day interbank deposit futures rates (DI rates) in Brazil ended lower tracking the drop of the locally traded U.S. dollar amid good news both domestic and from abroad....

São Paulo, 12 - The one-day interbank deposit futures rates (DI rates) in Brazil ended lower tracking the drop of the locally traded U.S. dollar amid good news both domestic and from abroad. However, the Brazilian Central Bank's caution while conduction its monetary policy, reinforced today by Copom's minutes, limited that movement. Traders said that the agreement between Republicans and Democrats to prevent a further shutdown of the US government has boosted domestic markets. "It was a strong improvement out there that contaminated here," noted a senior derivatives trader at a foreign brokerage firm. He assesses that President Donald Trump's "dissatisfaction" with the agreement for border security did not have an impact on financial markets." In addition, Jair Bolsonaro's health outlook has also boosted local securities, but news reports that the government's pension reform plan is "very different" from the draft leaked to the press weighed on businesses. "The President's health improvement may pave the way for the bill to reach Congress, but there is still no consensus on which draft will be sent," he says. For Carlos Pedroso and Maurício Nakahodo, economists at Banco MUFG Brazil, the risks in case of frustration of the reforms reinforce the view that the Copom does not intend to reduce the basic rate of interest. "The negotiation for the pension reform bill in Congress tends to extend and there is great uncertainty related to the moment of approval and especially to the content of the final version of the reform, which tends to be diluted during the negotiation stage," they wrote in a report. The January 2020 DI rates closed at 6.48%, from 6.505% in the previous settlement. The January 2021 DI contract settled stable at 7.16%, from 7.23%, while the January 2023 contract ended at 8.25%, from 8.34%. The January 2025 contract was at 8.77%, from 8.86%. Olívia Bulla / Agência CMA Translation by Ricardo Gozzi http://www.agenciacma.com.br/esp/



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MARKETS: DI rates close lower on USD, positive news

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