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Brazil’s real strengthens against dollar
20/08/2010
The Brazilian real strengthened slightly this week, with the expectation of increased investment inflows, on the back of a large share sale by Petrobras.
On Wednesday, the real was at BRL 1.7531 against the US dollar on the BM&FBovespa exchange, up from BRL 1.7550 on Tuesday’s close.
Expectations that investment inflows are strong and will remain so were bolstered by forex flow data posted by the country’s central bank. Brazil reported net foreign exchange inflows of $2.36 billion for the first two weeks of August, significantly up on the $2.02 billion posted for the same period in 2009.
On Wednesday the bank restricted itself to buying dollars at one of its daily auctions. Investors remained fearful, nevertheless, that the central bank may be more aggressive in supporting the dollar if the real strengthens above 1.75 per US dollar.
The central bank commented in recent weeks that it may go back to reverse dollar swap auctions to reduce currency gains.
On the interest rate futures market, the most-traded contract on the Brazilian Financial Exchange was that of January 2012. On Wednesday, the president of the central bank, Henrique Meirelles, offered his opinion that the Brazilian economy will accelerate in the third quarter, causing investors to adjust their positions.
On Wednesday, the real was at BRL 1.7531 against the US dollar on the BM&FBovespa exchange, up from BRL 1.7550 on Tuesday’s close.
Expectations that investment inflows are strong and will remain so were bolstered by forex flow data posted by the country’s central bank. Brazil reported net foreign exchange inflows of $2.36 billion for the first two weeks of August, significantly up on the $2.02 billion posted for the same period in 2009.
On Wednesday the bank restricted itself to buying dollars at one of its daily auctions. Investors remained fearful, nevertheless, that the central bank may be more aggressive in supporting the dollar if the real strengthens above 1.75 per US dollar.
The central bank commented in recent weeks that it may go back to reverse dollar swap auctions to reduce currency gains.
On the interest rate futures market, the most-traded contract on the Brazilian Financial Exchange was that of January 2012. On Wednesday, the president of the central bank, Henrique Meirelles, offered his opinion that the Brazilian economy will accelerate in the third quarter, causing investors to adjust their positions.
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