Brazil Real Falls for a Second Straight Day on U.S., Europe Debt Crises

Brazil’s real declined for a second day as debt concerns in the U.S. and Europe and a new tax on investments in foreign-exchange derivatives sapped demand for the currency.

The real headed for the biggest two-day decline since May, falling 0.7 percent to 1.5658 per dollar at 9:33 a.m. New York time, after tumbling 1.1 percent yesterday to 1.5555.

The real weakened as European stocks declined and investors speculated that Europe’s sovereign-debt crisis will derail the economic recovery, while concern mounted that U.S. lawmakers will fail to agree on the federal government’s debt ceiling by next week’s deadline.

“The real is following the international market,” said Ures Folchini, head of fixed income at Banco WestLB do Brasil SA in Sao Paulo. “With the international scene so bad, equities falling, the real is accompanying this,” he said in a telephone interview.

Brazil’s currency fell the most in more than a month yesterday after the government said it will levy a 1 percent tax on some net short dollar positions by investors in the country’s futures market. The government may increase the tax up to 25 percent if needed, according to the decree signed by President Dilma Rousseff and published yesterday in the Official Gazette.

Yields on the interest-rate futures contract due in January 2013 fell two basis points, or 0.02 percentage point, to 12.66 percent.

Brazil’s central bank sees a “more favorable” outlook for consumer price increases even as its forecast shows inflation converging to target only in 2013, according to the minutes of its July 19-20 meeting.

Inflation, which quickened in the past 10 months, accelerated to 6.71 percent in June. The central bank targets inflation of 4.5 percent, plus or minus two percentage points.

As in the statement accompanying the bank’s decision, policy makers removed from the minutes language committing themselves to raising rates for a “sufficiently long period.”

“The minutes reinforce my bets that the central bank isn’t going to raise rates in August, ” Folchini said. “There was a slight change in the text that indicates that the biggest inflation concerns of the central bank eased.”