Brazil's real led global losses as a weakeningeconomic outlook overshadowed central bank measures to supportthe currency.

The real fell 1.2 percent, to 2.7153 per U.S. dollar, at 5 p.m.in Sao Paulo, the most among 31 major counterparts. Swap rates, agauge of expectations for changes in Brazil's borrowing costs,climbed 0.09 percentage point to 12.84 percent on the contractmaturing in January 2016. The currency posted on Friday a weeklydrop of 3.8 percent, its biggest since September.

While analysts surveyed by the central bank lowered their2015 median economic growth outlook for a fifth straight week, theypredicted that inflation would accelerate further above theofficial target. The real tumbled last week as state-run PetroleoBrasileiro SA, at the center of nation's worst-ever corruptionscandal, was reduced to the lowest level of investment grade byMoody's Investors Service.

“You don't see many reasons to bet on Brazil at the moment,”Reginaldo Galhardo, foreign-exchange manager at Treviso Corretorade Cambio in Sao Paulo, said in a telephone interview.“Fundamentals are worsening more and more, and the forecastsreflect that.”

Analysts raised their inflation outlook for this year to 7.01percent and lowered their forecast for gross domestic productgrowth to 0.03 percent, according to the median of estimates in acentral bank survey of about 100 analysts conducted Jan. 30 andpublished Monday. The official target for annual inflation is 2.5percent to 6.5 percent.

Itau Unibanco Holding SA sees Brazil's GDP contracting 0.5percent versus a previous forecast of 0.2 percent growth, accordingto an e-mailed report Monday.

The nation posted a trade deficit of US$3.2 billion in January,wider than the $3 billion shortfall forecast by analysts surveyedby Bloomberg.

Brazil extended the maturity on all of the 13,000 currency swapcontracts it offered to roll over, worth $631.9 million, comparedwith 10,000 in daily auctions last month. It sold the equivalent of$98.1 million of swaps supporting the currency and limiting importprice increases. The central bank plans to offer as much as $100million a day in swaps until at least March 31, compared with $200million daily last year.

“The currency intervention program supports the real in the nearterm, but it won't last forever,” Galhardo said. “The long-termtendency is for the currency to weaken.”

–With assistance from Paula Sambo in Sao Paulo.

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