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MARKETS: DI rates open lower on weak economic activity

Feb 14, 2020 (Grupo CMA via COMTEX) --

São Paulo, 14 - The one-day interbank deposit futures rates (DI rates) in Brazil opened slightly lower, swinging within narrow margins, as investors react to further indication of weak economic activity in the final stretch of 2019. Market players also monitor the locally traded U.S. Dollar swingings and the coronavirus outbreak newsflow. "Today, the Brazilian real reacted right at the opening to the announcement of another 20,000 foreign exchange swap contracts last night. While monitoring the Central Bank's performance in the exchange rate, the long part of the forward curve returns yesterday's high and the shorter maturities react more intensely to the activity data", sums up Renascença Corretora fixed income trader Luís Felipe Laudísio. The Central Bank's economic activity index (IBC-Br) fell slightly more than expected in December compared to November. "And weaker data on the activity increases the bets for further cuts in the Selic, even if the FX rate continues to break records", notices Necton Corretora's chief economist André Perfeito. TAG Investimentos analyst Dan Kawa adds that the external scenario also favors the "closing" movement of the local forward curve. "Risk assets remain positive, despite the still delicate situation of the coronavirus in China and signs of fragility in global growth even before the outbreak of the epidemic," he says. For him, abundant global liquidity and the apparent absence of investment options continue to support global markets. Right after the beginning of the session, the January 2021 DI contract rate was at 4.235%, from 4.260% in the previous settlement. The January 2022 contract was at 4.78%, from 4.83%. The January 2023 contract was at 5.36%, from 5.41%, while the January 2025 contract was at 6.03%, from 6.08%. Olívia Bulla / Agência CMA Translation by Ricardo Gozzi

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