Real Falls as Sovereign Wealth Fund Approved to Buy Dollars

By Ye Xie

Sept. 20 (Bloomberg) -- Brazil’s real fell for a second day after the government authorized its sovereign wealth fund to start purchasing foreign currencies such as the dollar.

Brazil’s sovereign wealth fund has “no limit” on investing in such currencies, the Treasury said in an e-mailed statement. Finance Minister Guido Mantega last week vowed to take measures to prevent the real from strengthening further after the currency rose 33.6 percent since the beginning of 2009.

The real fell 0.7 percent to 1.7331 per dollar, from 1.7213 on Sept. 17. The currency touched 1.7031 on Sept. 14, the strongest level since December, on increased foreign purchase of Brazilian companies stocks and bonds.

The yield on Brazil’s interest-rate futures contract due in January 2012 rose six basis points, or 0.06 percentage point, to 11.51 percent, the highest level since Aug. 12.

Brazil’s inflation will end 2011 at 4.95 percent, up from a week earlier forecast of 4.90 percent, according to the median forecast in a Sept. 17 central bank survey of about 100 economists published today. Economists also raised their 2010 inflation forecast to 5.01 percent, from 4.97 percent a week earlier.