Bloomberg News

Brazil Real Rises Most in Three Weeks as Commodity Prices Gain

March 23, 2012

Brazil’s real gained the most in three weeks on speculation an increase in commodity prices will boost the country’s export revenue.

The real rose 0.5 percent, the most since Feb. 28, to 1.8102 per U.S. dollar. The advance helped pare the currency’s decline this week to 0.6 percent, the fourth straight weekly losses. The currency has lost 5.1 percent this month, the worst performer among emerging markets, after the central bank bought dollars and the government took measures to restrict local companies’ overseas borrowing.

Soybeans, one of Brazil’s main exports, rebounded from a one-week low. Currencies of commodity exporters, such as Australia and New Zealand, also advanced. Investors bought the real as a bet that the recent sell-off is excessive as commodities rise, said Alejandro Cuadrado, head of Latin America currency strategy at Banco Bilbao Vizcaya Argentaria SA.

“All commodity currencies are performing well,” Cuadrado said in an interview from New York. “Risk appetite is still the main driver for the real.”

Brazil has received foreign currency inflows of $18.6 billion this year through March 16, the central bank said March 21.

Yields on the Brazilian interest-rate futures contract due in January were unchanged at 8.92 percent. The yield has fallen six basis points this week.

Yields on interest-rate futures contracts erased an earlier drop after central bank President Alexandre Tombini said during a presentation today in Sao Paulo that Brazilian growth will pick up in 2012, bolstering speculation the central bank will refrain from deeper interest-rate cuts later this year.

“He highlighted the acceleration we’re going to have in economic activity, that 2012 will be better than 2011,” Marco Antonio Caruso, an economist with Banco Pine SA, said by phone from Sao Paulo.

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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