Interbank Deposit Rate


The Interbank Deposit Rate, or DI over, is known as CDI, in Portuguese. In Brazil, it was created in the 1980s, to insure a better distribution of the financial institutions’ resources. It’s merely a loan rate for transactions between banks or financial institutions, backed by private bonds. A CDI has the same basic characteristics of a Bank Deposit Certificate. Its negotiation, however, is restricted to the interbank market.

Banks must balance their reserves and cash flow daily, so they can meet the reservation goal set by the Brazilian Central Bank (the local equivalent to the FED). If the final balance is below the goal, the bank has to take a loan from another institution that currently presents a surplus, until the goal is finally matched. The unbalance can be achieved if the volume of withdrawals isn’t matched by the volume of deposits in a day. As well, the compulsory deposit required by the Brazilian Central Bank (this deposit is a requirement by law, and its main purpose is helping the entity to balance the volume of resources available for credit. It’s a regulatory tool used frequently by the Brazilian government) may help this balance tilt in one or another direction. The interest rate at which this money moves from one institution to the other is known as CDI. As an investment, the CDI’s advantages are safety, speed and its lack of income tax and tax over financial transactions (IOF, in Portuguese) burdens.

This interbank exchange may be conducted via public or private bonds. If private bonds are used, CETIP (Central de Custódia de Títulos Privados, or Private Bond Custody Center, in loose translation. This is an open society company that offers services to the financial market in Brazil) registration is required – and payment will take into account the DI rate. If public bonds are used, the same type of registration must be conducted with SELIC (Sistema Especial de Liquidação e Custódia, or Special Liquidation and Custody System, in lose translation. This entity is responsible for the Brazilian prime rate, which carries the entity’s name) and, consequently, the Selic rate will be applied to all negotiations. Asides from the differences in nature, both entities may also allow for different negotiation deadlines – although that will happen in more rare occasions.

DI rates and Selic rates are usually fairly close. Differences occur mainly because of the nature of the bonds being traded. Private bonds have a tendency to present higher risk rates, considering they represent a specific private institution. For public bonds – registered with Selic – the government itself is being represented in the bonds. Therefore, DI rates tend to be slightly higher.

After all assets of the day have been liquidated, CETIP will calculate the transaction average. All rates are listed in increasing order, and 5% of the extremes are then excluded. The weighted average of the remaining rates is what becomes the DI over rate. CETIP publishes it yearly – considering 252 work days.

The CDI is one of the most important indexes in the Brazilian market. Its daily average is widely used by the market as a basis for profit calculations of a variety of financial products – including the Bank Deposit Certificate, real estate notes, agricultural credit bills and so on. As well, the CDI is used as a benchmark for investment funds: a reference meant to help compare results, making sure this specific rate can be surpassed by the fund’s investments. Most investors use it informally as a comparison note as well – a good investment usually matches or surpasses the CDI.

For experienced or newer investors, this tip can be invaluable: check your profits against the CDI. It’s not that difficult to match it – or even surpass it. However, taxes and fund fees have a tendency to impact profitability. So if your investment matches the CDI but your profits don’t come even close to it, it may be time to rethink your strategy.

To check the CDI history one may access the CETIP website, at:

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