Brazil’s Real Rises Most in 2 Weeks on Commodity, U.S. Recovery

By Adriana Brasileiro

March 3 (Bloomberg) -- Brazil’s real rose the most in more than two weeks against the dollar as a rebound in commodity markets and U.S. stock futures renewed investor interest in emerging-market assets.

“There is a natural recovery today after yesterday’s steep losses,” said Mario Cebrian, head of foreign-exchange trading at Banco Fibra SA in Sao Paulo.

The real increased 1.2 percent to 2.4192 per U.S. dollar at 7:49 a.m. New York time, compared with 2.4473 per dollar yesterday. The real fell as much as 2.7 percent to 2.4501 yesterday, the lowest since Dec. 19.

Brazil’s economic performance will continue to support the real and help the currency outperform in relative terms, according to Goldman Sachs Group Inc.

“Indeed the real has performed better than historical relationships to the Standard & Poor’s 500 Index would imply,” Goldman Sachs London-based analysts Themos Fiotakis and Thomas Stolper wrote in an e-mailed note yesterday.

Goldman Sachs advised investors on Jan. 28 to bet the dollar would fall against the real. That recommendation hit its “stop loss,” a point at which a trade is canceled at a pre- determined price, at 2.435 per dollar yesterday.

Today, the real is the third biggest gainer among the 16 most actively-traded currencies tracked by Bloomberg after the Australian dollar and the Swedish krona.

Rising commodity prices also increased appetite for the Brazilian currency, as nearly two-thirds of Brazil’s exports are commodities such as crude oil and soybeans.

Crude oil rose as a weakening dollar spurred demand of the commodity as a hedge against inflation. Crude oil for April delivery advanced as much as 90 cents, or 2.2 percent, to $41.05 a barrel on the New York Mercantile Exchange today.

The yield on Brazil’s zero-coupon, local-currency bonds due in January 2010 rose four basis points, or 0.04 percentage point, to 10.81 percent, according to Banco Votorantim.

The yield on the overnight futures contract for July delivery rose two basis points to 11.21 percent.

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net