The Brazilian real weakened today after Moody’s Investor Service maintained Brazil’s government bond rating, but changed the outlook from positive to stable.
Moody’s confirmed Brazil’s Baa2 rating, but changed the outlook to stable from positive. The rating agency cited following reasons for the decision:
1) Key credit metrics are deteriorating, especially Brazil’s government debt-to-GDP and the investment-to-GDP ratios, which are weaker than those of other sovereigns in Baa rating category.
2) Evidence that the economy is going through an extended low-growth period given expectations that GDP will increase at annual rates of just over 2% in 2013 and 2014.
3) The deterioration in reporting quality of the government accounts, as well as continued Treasury borrowings to support increased lending by public banks.
USD/BRL rose from 2.2006 to 2.2016 as of 16:51 GMT today following the advance to 2.2136.
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