The Brazilian real is extending its rebound in November to close out the trading week despite a plethora of disappointing economic data. The real has been one of the worst-performing currencies in global foreign exchange markets, but the real has turned the sinking ship around and is poised for a monthly gain of about 7% against its US peer. Is the real setting itself up for a bullish 2021 run?
On Friday, the Central Bank of Brazil reported that bank lending rose 1.4% in October, down from the 2.1% increase in September. But the value of loans surged 14.5% year-over-year last month, up from 13.4% in the previous month. Lending to businesses jumped 1%, while lending to households climbed 1.7%.
The government, meanwhile, reported that the unemployment rate rose 0.2% to 14.6% in September, up from 14.4% in August. This is the highest jobless rate on record, highlighting just how damaging the coronavirus public health crisis has been on the overall labor market. Since the beginning of the pandemic, the unemployment rate has climbed 3%. That said, net payrolls increased to 395,000 last month, up from 313,564 in September.
Earlier this week, it was confirmed that foreign direct investment tumbled 13.94% to $1.79 billion. The nation’s current account surplus diminished 34.95% to $1.47 billion.
On Tuesday, the IPCA mid-month inflation rate in November rose 0.81%, coming in higher than the market forecast of 0.72%. The mid-month CPI surged at an annualized rate of 4.22%, which was also higher slighly from the median estimate of 4.12%.
The South American country has still failed to get a handle on the COVID-19 pandemic. Every time it looks like Brazil is seeing a decline in new infections, the number of cases begin to increase. Confirmed cases had slumped to as low as 8,500 per day earlier this month, only for that figure to spike to as high as 48,000 on Wednesday.
In total, Brazil has reported 6.2 million cases, with a death toll of 171,000.
The USD/BRL currency pair dipped 0.08% to 5.3323, from an opening of 5.3369, at 19:38 GMT on Friday. The EUR/BRL jumped 0.31% to 6.3774, from an opening of 6.3575.