BRAZIL: DI Rates Climb Further In Reaction To Dollar's Multi-year High

(RTTNews) - The one-day interbank deposit futures rates (DI rates) in Brazil are still on the rise, tracking the multi-year highs of the locally traded U.S. dollar and reacting to a higher-than-expected reading in an inflation index that influences real estate rent contracts in the country.

The January 2019 DI contract rate was rising to 6.680% from 6.360%, while the January 2020 DI rate had an increase to 7.74%, from 7.62%. The January 2021 DI contract rate was at 8.89%, from 8.67%. The locally traded U.S. dollar was up 1.18%, at R$ 3.7440, after reaching an intraday high of R$ 3.7770 - the highest level since early 2016.

Renascenia Corretora says that traders are still adjusting positions after the Brazilian central bank decided to leave the benchmark interest rate unchanged at 6.50.

Camila Abdelmalack, an economist at Capital Markets, said that investors are also reacting to a 1.2% monthly increase in the second preliminary reading of the IGP-M price index in May. According to her, the growth was higher than the 1.12% expected by analysts.