Bloomberg News

Brazil Real Snaps Losing Streak on European Support for Greece

September 15, 2011

Sept. 15 (Bloomberg) -- Brazil’s real snapped a nine-day losing streak after European leaders’ pledge to support Greece and lend to euro-area banks spurred optimism policy makers will contain the region’s debt crisis.

The real rose 0.4 percent to 1.7069 per dollar at 5 p.m. in New York, interrupting its longest losing streak since 2005. The currency has lost 6.9 percent this month.

The real and the euro gained as global stocks rebounded after Chancellor Angela Merkel and President Nicolas Sarkozy said late yesterday that they’re “convinced” Greece will stay in the euro area. The European Central Bank coordinated with international policy makers to lend dollars to help credit constrained banks, while China offered to buy euro bonds from countries involved in the sovereign debt crisis. Greece also signaled Arab investors may invest in the country.

“The market is getting better today,” said Marco Freire, chief investment officer for fixed income at Franklin Templeton Investimentos, which manages $1 billion of assets in Brazil. “China investing in Italy, the Middle East in Greece, and Germany and France saying they will free up money, you have various things helping the market to improve.”

Yields on most interest-rate futures contracts maturing through January 2014 declined after unemployment claims in the U.S. unexpectedly rose last week, highlighting concerns the global economic recovery is faltering.

Yields on the futures contract due in January 2013 fell six basis points, or 0.06 percentage point, to 10.72 percent.

Applications for U.S. unemployment benefits unexpectedly rose last week to the highest level since the end of June, underscoring the risk of further weakness in the labor market. Jobless claims climbed by 11,000 to 428,000 in the week ended Sept. 10, figures from the Labor Department showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 411,000, according to the median forecast.

“The data in general coming out of the U.S. is weak,” said Newton Rosa, chief economist at Sul America Investimentos in Sao Paulo. “This keeps the door open for new interest-rate cuts.”

--Editors: Marie-France Han, Glenn J. Kalinoski

To contact the reporters on this story: Josue Leonel in Sao Paulo at jleonel@bloomberg.net; Gabrielle Coppola in Sao Paulo at gcoppola@bloomberg.net

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


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