Bloomberg News

Brazilian Real Climbs on Europe Optimism; Rate Yields Decline

July 19, 2011

July 19 (Bloomberg) -- Brazil’s real rose after speculation that European lawmakers may reach an agreement to resolve the region’s debt crisis spurred economic growth optimism and boosted demand for commodities.

The real advanced 0.7 percent to 1.5635 per dollar at 5 p.m. New York time, from 1.5745 yesterday.

Oil rose the most in a week in New York on speculation that European lawmakers will reach an agreement to resolve the region’s debt crisis and as U.S. housing starts surged in June. The real’s appreciation is being driven by increasing commodity prices, said Alfredo Barbutti, chief economist at Liquidez DTVM Ltda in Sao Paulo.

“The rise today is more in line with what we’re seeing abroad,” Barbutti said by phone.

All 25 emerging-market currencies tracked by Bloomberg gained against the dollar. European Union government chiefs plan to meet for the second time in a month on July 21, aiming to break a deadlock over a new Greek rescue. The Dollar Index, which tracks the international value of the greenback, fell 0.5 percent.

Yields on most Brazilian interest-rate futures contracts declined after unemployment in June in Latin America’s biggest economy was higher than analysts projected.

The yield on the interest-rate futures contract due in January, the most traded in Sao Paulo, declined one basis point, or 0.01 percentage point, to 12.46 percent. The yield on the contract due in January 2017 dropped two basis points to 12.44 percent.

The jobless rate fell to 6.2 percent in June, from 6.4 percent in May and 7 percent a year earlier, the national statistics agency said today in a report distributed in Rio de Janeiro. The rate, the lowest ever for June, compared with a median forecast of 6.1 percent from 32 economists surveyed by Bloomberg.

--With assistance from Margot Habiby in Dallas, Alexander Ragir in Rio de Janeiro and Matthew Bristow in Brasilia. Editors: Glenn J. Kalinoski, Richard Richtmyer

To contact the reporters on this story: Gabrielle Coppola in Sao Paulo at gcoppola@bloomberg.net; Benjamin Bain in New York at bbain2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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