Brazilian Real up on rally in commodities

08-04-2009 13:12

The Brazilian Real went up today, posting its fifth monthly gain due to increasing prices of commodities which spurred the nation’s trade surplus and attracted overseas investors to the fifth largest country in the world. Brazil’s currency rose 4.7% in July, which is the fourth best result versus the US Dollar among the 16 most-popular currencies, following the Loonie (Canadian dollar), the Swedish Krona and the Norwegian Krone.

Rally

Gerson de Nobrega, treasury desk manger at Banco Alfa de Investimento, commented: “Overseas traders are snatching up Brazilian stocks and investments with a fixed stream of income as the country’s economy is growing at a faster tempo. The rally in commodity prices also spurred the country’s trade surplus, stimulating the Brazilian Real.”

Best result

The Real went up 1% reaching 1.8651 a US Dollar today at 5:01 p.m. New York time, while last Thursday it reached a level of 1.8830. The Brazilian currency has increased 24% so far this year, which is the best result versus the US Dollar among the 16 most-popular currencies. Brazil’s currency rose during six consecutive months during the period which ended May 2007.

IPO

Businesses from Brazil used the increased investor demand to issue stock. Brasil Foods SA (BRF), the company that results from the purchase of Sadia SA by Perdigão SA, increased R$ 5.29 billion ($ 2.82 billion) in a stock issue on July 21th. Brazilian consumer goods company Hypermarcas SA, increased R$ 793.5 million in a stock issue. The initial public offering (IPO) by Companhia Brasileira de Meios de Pagamento, a Brazil-based provider of credit card processing services, had a total value of R$ 8.4 billion, while 57% of this value was obtained by overseas investors.

Commodities

During the first half year of 2009, the Brazilian trade surplus increased 23.8% in comparison with the first six months of 2008, on the back of the nation’s exports reaching their highest levels since November as a result of progressing overseas demand for commodity goods. The Trade Ministry announced at the beginning of July that Latin America’s biggest economy had a $4.6 billion trade surplus in June, which is the largest since December 2006. Strategists at BNP Paribas, one of Europe’s most important banks, projected that the trade surplus would amount to $3.6 billion in July, which led to an one-year total of $27.7 billion from $27.5 billion.