The Brazilian real strengthened against the U.S. dollar today as the rising commodity prices make better prospect for the exports and because the growing global supplies allows the traders to take more risk while seeking for better deals.
The real’s strengths are also supported by the optimistic outlook for the foreign inflows, which may improve even further with the increase of the interest rates. The yield of the January 2011 contract added 4 basis points to 10.5 percent, the highest rate since March 16th, on the interest rate futures market. The central bank is expected to increase its interest rate by at least 50 basis points (to 9.25 percent) on April 28th.
The upcoming presidential election may reverse the real’s movement as both candidates for the presidential seat are likely have intention to subdue the currency’s appreciation in the medium term. The possibility that the central bank will decrease the interest rates can be also dangerous from the investors’ point of view.
USD/BRL traded near 1.7665 as of 20:20 GMT down from the opening level of 1.7805. EUR/BRL traded at 2.3825 after it opened at 2.3776.
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