President’s Rise in the Polls Is Sinking the Brazilian Real

Real, the Brazilian currency Brazil’s real advanced from a seven-month low as the Brazilian central bank signaled it will maintain support for the currency when it increased the number of foreign-exchange swap contracts offered in a rollover. 

The currency climbed 0.2% to 2.4062 per U.S. dollar in Sao Paulo on Wednesday after falling on Tuesday to 2.4120, the weakest level since Feb. 12.

Even when the central bank said it was raising the number of contracts offered in Wednesday’s rollover auction to 15,000 contracts from 6,000, Real has fallen 6.8% in September on concern Brazil will struggle to recover from its first recession since 2009 as polls before the Oct. 5 election showed increased support for President Dilma Rousseff.

“The central bank’s action will support the currency today (Wednesday), at least at the beginning of the day,” anticipated João Paulo de Gracia Correa, a trader at Correparti Corretora de Câmbio in Curitiba, Brazil

“The Real is facing strong downward pressure as Rousseff rises in the polls.”

A Vox Populi poll published this week showed Rousseff would defeat Marina Silva in a probable runoff while other surveys showed the race remained too close to call.

The incumbent’s backing in the recent Vox Populi poll increased to 46% for an October 26 second-round vote, up from 41% in the last survey published September 15. Silva’s support fell to 39% from 42%, according to the poll.

The September 20-21 poll, which had a margin of error of 2.2 percentage points, surveyed 2,000 people.

Global Economy

Following the opening remarks by UN Secretary General Ban Ki-Moon, Brazil’s president Dilma Rousseff was the first head of state to address the General Assembly on Wednesday. She called for a “re-launching of global economy” and a “true reform” of the UN Security Council.

Rousseff described the current composition of the Council as “inadmissible” and urged for a reform that would give more power to emerging countries. “The use of force cannot replace negotiation in conflict resolution,” she said and criticized military interventions which she said have “aggravated conflicts with humanitarian consequences.”

The head of state also called for a “re-launching of global economy” and said that developing countries should be better represented in international financial institutions that otherwise are in danger of losing legitimacy.

“The delay in the expansion of voting rights of developing countries in these institutions is unacceptable,” Rousseff stated. She said it was imperative to eliminate what she called a disparity between the importance of emerging economies and their “insufficient” representation in such institutions as the International Monetary Fund and the World Bank.

The leaders of over 140 countries gathered at UN headquarters in New York for the 69th annual United Nations General Assembly, with an agenda focused on crisis including the rise of Islamic State in Syria and Iraq and the deadly Ebola outbreak, among other issues.

“It has been a terrible year for principles of the UN Charter, from barrel bombs, to beheadings (…) to attacks on UN schools,” Ban Ki-Moon said as he opened the debate.

He referred the ongoing civil war in Ukraine, the deadly Ebola outbreak, the nuclear talks with Iran and the faltering ceasefire in Gaza saying they illustrated the fragility of global states and institutions and warned against the “rise of divisive politics.”

Rousseff’s speech was followed by US Barack Obama’s remarks, and the addresses of the leaders of Uganda, Chile, France, Mexico, Turkey, Bolivia, Dominican Republic, Costa Rica, Honduras, Venezuela and the United Kingdom.

Mercopress

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