Real May Rise with Increasing Interest Rates

The Brazilian real may go up as the central bank is going to increase the interest rates in an attempt to help the economy by attracting the foreign investors, which are seeking the higher yields.

The central bank are expected to rise the benchmark by a half of the percentage point, at least, to 9.25 percent from the Brazil’s record low level of 8.75 percent. These measures are undertaken to curb the nation’s inflation and to boost the economy, which may be aided by the global investors, who are looking to buy the higher-yielding assets with the money, borrowed in the countries with the low interest rates. The real is currently closing to 1.75 per U.S. dollar and may rise as high as 1.7 per dollar, though the government may prevent further appreciation to protect the local exporters.

USD/BRL traded today at about 1.7545 near its opening level of 1.7550 as of 09:10 GMT today. EUR/BRL traded near 2.3839 after it opened at 2.394.

If you have any questions, comments or opinions regarding the Brazilian Real,
feel free to post them using the commentary form below.