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Brazil real weakens on disappointing Q1 trade surplus

SAO PAULO: Brazil's real currency closed slightly weaker against the dollar Monday due to the market's reaction to trade balance figures combined with tight trading volume in the afternoon session, traders said.

The real ended the day at 1.743 per dollar, 0.3 percent weaker than Friday's close.

Traders believe the market was disappointed with Brazil's trade balance for the first quarter, despite the fact that the country's $26 million surplus was markedly better than the $816 million deficit of the same period last year.

"The impact was psychological. Investors had been hoping for a surplus of between $200 (million) and $300 million," a trader at a local bank said.

"The financial volume did not merit any outstanding movement, but it was enough to push the price of the dollar up," said another trader.

He added that the slipping of the real may continue because of $4 billion in foreign debt that is about to fall due.

Some analysts, however, are discounting the fall in the real because they believe most of the debt will be rolled over and everything indicates that direct foreign investments will continue to flood into the country. -Reuters