Brazil’s Real Advances as Levy’s Fiscal Measures Clear a Hurdle

Brazil’s Real Advances as Levy’s Fiscal Measures Clear a Hurdle

by Paula Sambo/Bloomberg
10:09 AM BRT
May 20, 2015

Brazil’s real climbed for the first time in four days as a vote by lawmakers supported Finance Minister Joaquim Levy in his effort to reduce budget deficits and preserve the nation’s investment-grade status.
The currency gained 0.3 percent to 3.0297 per U.S. dollar at 9:49 a.m. in Sao Paulo, the best performance among 31 major currencies tracked by Bloomberg after the South African rand and the Turkish lira.
The real rose as the lower house approved the basic text of legislation to increase taxes on imports, clearing a hurdle toward the passage of Levy’s broad package of fiscal measures. The currency fluctuated earlier Wednesday as investors awaited minutes from the Federal Reserve’s April meeting.
“Victories for Levy in Congress help the real,” Deives Ribeiro, a foreign-exchange manager at Fair Corretora de Cambio in Sao Paulo, said in a telephone interview. “The volatility is mostly due to the last adjustments before the Fed’s minutes, which is the main driver for emerging-market currencies today.”
Swap rates, a gauge of expectations for Brazil’s borrowing costs, declined 0.06 percentage point to 13.41 percent on the contract maturing in January 2017.