July 25, 2019 / 2:41 PM / 4 months ago

UPDATE 1-Brazil current account deficit widens sharply in June

(Adds detail, market reaction)

By Isabel Versiani and Jamie McGeever

BRASILIA, July 25 (Reuters) - Brazil’s current account deficit widened far more than expected in June, with the deficit as a share of gross domestic product reaching its highest since late last year, central bank figures showed on Thursday.

A near-11% fall in exports, driven by a steep fall in sales of soy and manufactured goods to Argentina, fueled a deficit in goods trade, while the services deficit widened 10% from the same month last year to $3 billion.

The current account deficit, a broad measure of Brazil’s balance of payments position including interest payments, transfers and travel expenditures, was $2.9 billion in June. That was the biggest shortfall since January and almost twice as wide as the $1.5 billion deficit median forecast in a Reuters poll of economists.

As a share of GDP over the 12 months to June, the deficit was 0.91%, the widest since October last year, the central bank said.

Brazilian financial markets reacted negatively to the data. The real fell 0.75% to 3.80 per dollar, its weakest level in more than two weeks, interest rate futures spiked higher and the benchmark Bovespa stock index fell 1%.

In the first half of the year, Brazil’s exports fell 1.5% and imports rose 1.1%, the central bank said, leading to a reduction of almost 10% in the goods trade surplus to $24.8 billion.

Foreign direct investment into Brazil totaled $2.2 billion in June, less than half the Reuters poll estimate of $5.75 billion. In the January-June period, net FDI inflows totaled $37.3 billion, up 10.4% on the same period last year.

In the 12 months to June, net FDI inflows of $91.8 billion were the equivalent of 4.91% of GDP, down from 5.17% of GDP in the 12 months to May, the central bank said. (Reporting by Isabel Versiani Writing by Jamie McGeever Editing by Chizu Nomiyama and Sonya Hepinstall)

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