BRASILIA (Reuters) – Brazil’s real rose more than 1% against the dollar on Friday to chalk up its biggest rise since late November after the central bank intervened in the swaps market for the second straight day following the currency’s slump this week to new lows.
Investors could lose $864 billion on debt with negative yields over the next 12 months, according to Daniel Tenengauzer, head of markets strategy at Bank of New York Mellon (NYSE:BK) Corp. He predicts bond holders could separately shed another $176 billion in lost purchasing power through the securities, which would guarantee a loss if held to maturity.
One of the most gloomy outlooks to date for the real, it assumes renewed selling pressure will knock away any support the currency gets from the central bank’s intervention in the swaps market this week.
“It’s a huge disruption. We’re selling simple consumer products that are of no strategic significance to China or the U.S., and we’re just caught in the middle,” said one CEO.