Brazilian Currency Rises to Six-Week High on Fed Policy Outlook

Brazilian Currency Rises to Six-Week High on Fed Policy Outlook

By Filipe Pacheco/Bloomberg

10:00 AM BRT
April 16, 2015

Brazil’s real climbed to a six-week high after a U.S. housing report added to speculation that the Federal Reserve will keep borrowing costs low for a longer period of time, supporting emerging markets.

The currency rose for a third straight day, advancing 0.1 percent to 3.0260 per dollar at 9:50 a.m. in Sao Paulo, the strongest level on a closing basis since March 5.

The real gained along with other developing-nation currencies after the U.S. government said housing startsrose less than forecast in March. Brazil’s currency extended its gain this month to 5.7 percent, the best performance among 16 major currencies tracked by Bloomberg.

“There is a growing feeling among investors and traders that it will take longer for the Fed to raise rates, and that benefits most emerging-market currencies,” Reginaldo Siaca, a currency manager at TOV Corretora de Cambio in Sao Paulo, said in a telephone interview.

Swap rates on the contract maturing in January 2017, a gauge of expectations for changes in Brazil’s borrowing costs, increased 0.08 percentage point to 13.03 percent.