The Brazilian currency ended a third week of straight gains versus the greenback, the pound and several other major currencies as optimism and risk appetite is pushing traders to inject money in South America’s wealthiest economy.
A new wave of positive reports moved markets this week, causing equities and commodities to rise globally, favoring the outlook for the Brazilian currency and economy, since most of the nation’s exports are commodity-based, influencing the real’s performance as demand fluctuates. Risk appetite also brought investors to inject capital in real-priced assets, as interest rates in Brazil remain among the highest in the world and a series of IPOs is likely to move markets in Brazil until the end of the year. The Brazilian real also touched the highest level in 10 years versus the British pound as the financial system is the U.K. is struggling to recover from the credit crunch.
Analysts refer real’s consecutive weekly gains partially to capital inflow towards the South American nation, which is experiencing a bullish market as risk appetite provided support for Bovespa, Sao Paulo stock exchange to climb severely, since it bottomed in the first quarter facing the consequences of the global slump. The forecast for the real remains optimistic, and further gains can be expected if the economy continues on its recovery path.
USD/BRL closed the week at 1.8039 from an opening price of 1.8060 yesterday. GBP/BRL traded at 2.9555 from 2.9686.
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