Brazil real rallies 2 pct after surprise interest rate hike
RIO DE JANEIRO, Oct 30 (Reuters) - The Brazilian real rallied over 2 percent early on Thursday as a surprise interest rate hike by the central bank raised hopes that re-elected President Dilma Rousseff is on track to adjust economic policies in her second term. The real jumped 2.1 percent in the first minutes of trade to 2.4155 per dollar after Brazil raised the base Selic rate to 11.25 percent from 11.0 percent on Wednesday night, surprising all 43 economists in a Reuters poll who expected no rate change. Yields paid on short-dated contracts for interest rate futures <0#2DIJ:> rose as analysts said the rate hike was probably the beginning of a new tightening cycle by the central bank. Long-term interest rate futures fell, on the other hand, on bets that a more credible monetary policy will bring down inflation, making room for lower interest rates down the road. Most-traded interest-rate futures contracts at 1120 GMT month ticker last previous close change(p.p. (pct) (pct) ) JAN5 11.24 10.943 0.297 JAN6 12.17 11.83 0.34 JAN7 12.21 11.98 0.23 JAN1 12.07 12.15 -0.08 JAN3 12.08 12.22 -0.14 (Reporting by Walter Brandimarte Editing by W Simon)
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