Brazil's Real Heads for Weekly Loss on Declining Commodities

By Adriana Brasileiro

Aug. 15 (Bloomberg) -- Brazil's real declined for a second day and headed for a weekly loss as falling commodity prices raised speculation that the trade surplus will narrow, reducing foreign currency flows.

The real dropped 0.4 percent to 1.6302 per dollar at 9:11 a.m. New York time, from 1.6236 yesterday. Earlier the currency touched 1.634, the weakest since June 13. It has declined 1.3 percent this week after tumbling 3.1 percent last week.

``It will be very hard for commodity prices to stay at the high levels we've seen in the past,'' said Jose Carlos de Faria, chief economist at Deutsche Bank AG in Sao Paulo. ``Adjustments are happening, and that will impact trade flows.''

The Brazilian currency has lost 4 percent since Aug. 1, as commodity prices fall and concern grows that the U.S. credit crisis is spreading through global markets. The Reuters/Jefferies CRB Index of commodity prices has declined 22 percent since reaching a high on July 3.

The yield on Brazil's zero-coupon bonds due in January 2010 fell 3 basis points, or 0.03 percentage point, to 14.78 percent, according to Banco Votorantim.

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net