Brazilian Real up on rising optimism and risk appetite

09-19-2009 10:32

The Brazilian Real posted a third consecutive week of rises against the US Dollar and numerous other important currencies due to risk seeking investors and a positive sentiment, which attracted investors to the fifth largest country of the world. Furthermore, the Real rose versus the British Pound as the nation’s financial system remains critical.

Rising optimism and risk appetite

Another wave of optimistic data impacted the markets during this week’s trading session, on which stocks and commodities rates increased, boosting forecasts for the Real and the Brazilian economy. Real’s trading results are affected by fluctuating demand for Brazilian exports, as it mainly consists of commodity goods. Risk seeking traders also invested in Real-priced trading options, while Brazilian interest rates are still one of the highest in the world and a number of initial public stock offerings (IPO) will probably influence Brazilian markets until the end of 2009. The Brazilian currency also reached the strongest level in a decade against the Pound Sterling on the back of the British financial system facing difficulties in finding its path out of the credit crisis.

Brazilian Real up

Currency analysts attribute the Real’s third week of straight gains partly to investors injecting money in South America’s wealthiest economy, which is dominated by a bullish market sentiment as risk seeking traders boosted the Bovespa, a São Paulo-based stock exchange, to rise sharply, as it reached the lowest levels in the first three months of this year as a result of the worldwide recession. The outlook for the Brazilian currency remains positive, while the Real will probably rise further in case the economy continues to improve.