Oct. 1 (Bloomberg) -- Brazil’s real, the world’s second- best performing currency this year, will rally for an eighth month as a surge in share sales led by Banco Santander SA’s local unit lures foreign investors, Putnam Investments said.

The currency may climb to as strong as 1.7 per dollar this month, the highest since touching 1.6968 on Sept. 8, 2008, said Paresh Upadhyaya, a senior vice-president at Putnam Investments. It has soared 30 percent this year to 1.7866, more than all currencies tracked by Bloomberg after the Seychelles rupee.

“There’s clear upside for the real in October,” Upadhyaya, who helps manage $21 billion in currencies, said in a telephone interview from Boston.

The Sao Paulo-based unit of Banco Santander, Spain’s biggest bank, and five other companies plan to sell as much as 17.4 billion reais ($9.7 billion) shares in October as a recovery in Latin America’s largest economy fuels demand for the nation’s assets, according to data compiled by Bloomberg. That would mark the most Brazilian share sales in a month since iron- ore producer Vale SA raised 19.4 billion reais in July 2008.

Brazil’s gross domestic product grew 1.9 percent in the April-to-June period, more than the 1.7 percent median estimate in a Bloomberg survey of analysts and the first expansion since the third quarter of 2008. The economy recovered after the central bank, led by President Henrique Meirelles, lowered the benchmark lending rate to a record low of 8.75 percent from 13.75 percent at the beginning of the year.

“Fundamentally, there doesn’t appear to be anything that would prevent the real from appreciating,” said Upadhyaya. “It’s difficult to see what could arrest this trend.”

Banco Santander IPO

The initial public offering of as much as 13.1 billion reais by Banco Santander’s Brazilian unit is one of six primary and secondary share sales planned for October, according to Bloomberg data. Toll-operator Cia. De Concessoes Rodoviarias, Gol Linhas Aereas Inteligentes SA, Brazil’s second-biggest airline, and real-estate companies PDG Realty SA Empreendimentos e Participacoes, Rossi Residencial SA and Brookfield Incorporacoes SA will also seek to sell shares this month.

Rossi and PDG will price the follow-on sale of shares tonight after markets close. Rossi is selling 55 million shares and PDG is selling 56 million.

Brazilian companies have raised 20.5 billion reais in share offerings this year, according to exchange owner BM&FBovespa SA. Cia. Brasileira de Meios de Pagamento, the payment-processing company for the largest credit card network, sold 8.4 billion real of shares in June.

Bovespa Rally

Brazil’s initial public offerings may double next year as the stock market extends its best rally in six years and growth in Latin America’s largest economy accelerates, according to Bank of America Corp. The Bovespa index has surged 61 percent this year.

Diego Donadio, a senior analyst for Latin America at BNP Paribas in Sao Paulo, estimates foreign investors will buy about 70 percent of the share sales in October, bolstering dollar inflows. He predicts the real will rally to 1.75 per dollar in October and reach 1.70 at year-end.

Brazil’s currency will end the year at 1.8 per dollar, according to the median estimate of 20 analysts in a Bloomberg survey.

Brazil’s central bank has purchased dollars since May in a bid to curb the real’s rally. The country’s international reserves rose to a record $223.71 billion on Sept. 29, up 17 percent from this year’s low of $199.34 billion on Feb. 26. BNP estimates the central bank has bought $14 billion since May.

To contact the reporters on this story: Fabio Alves in New York at falves3@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.

Last Updated: October 1, 2009 17:29 EDT