Brazil real rises as Temer administration confident on rebound

Bloomberg.- Brazil’s real led advances among emerging-market currencies as raw-material prices rose and on a report that President Michel Temer’s administration expects a last-quarter economic rebound.

The real climbed 0.2 percent to 3.1995 per dollar at 10:03 a.m. in Sao Paulo. Brazilian assets are among the best performers in the world this year on speculation that Temer will be able to win back investor confidence and help restore economic growth. Bloomberg’s commodity index rose 0.2 percent.

Last week, lawmakers approved a proposal to limit growth in public spending, a key measure to trim the near-record budget deficit. The Brazilian government expects lower fuel prices, the repatriation of funds held illegally overseas and the spending bill to strengthen the economic recovery, Valor Economico reported, citing government officials it didn’t name.

“The domestic environment is improving with the fiscal adjustment bill and rising business confidence, all of which is pushing the real up,” said Italo Abucater, the head of foreign-exchange trading at Icap Brasil, who expects the real to rise to 2.9 per dollar by November. “There is also expectation about the repatriation bill which is improving capital inflows to Brazil.”

A second vote on the spending-cap bill is expected to take place in the Lower House by the end of the month. The legislation then goes to the Senate, where it also requires approval by a three-fifths majority in two separate votes.

Swap rates on the contract maturing in January 2018, a gauge of expectations for interest-rate moves, rose 0.03 percentage point to 12 percent.

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