the visible hand

it is the theory which decides what can be observed – einstein

Brazil’s real gains to 7-yr high

Posted by ecoshift on October 18, 2007

Brazil’s real gains to 7-yr high, stocks end up
|News | Market News | Reuters

Brazil’s currency, the real (BRBY: Quote, Profile, Research), gained nearly 2 percent to 1.788 per U.S. dollar, its strongest level since August 2000. The real surged even as the central bank bought dollars on the spot foreign-exchange market to soak up the flood of greenbacks to Brazil.

The central bank voted unanimously on Wednesday to keep the benchmark Selic rate unchanged at 11.25 percent.

Brazil’s rates are among the highest in the world when discounted for inflation, making it attractive for international investors to put funds in local fixed income securities to boost returns. The absence of further rate cuts following two years of monetary easing boosted that appeal.

The prospects of rate cuts in the United States also helped bolster the real as investors flee lower-yielding countries to pour cash into Brazil.
“There will be an enormous difference between domestic rates and those overseas, which increases the appetite for Brazilian assets,” said Julio Cesar Vogeler, a currency trader at the Didier Levy brokerage.


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