Brazilian Real Headed to the Biggest Weekly Increase in 2011

Brazil’s real headed to the biggest weekly gain this year as increased investor confidence in global economic growth boosted demand for emerging-market currencies.

The real gained 1.2 percent this week to 1.6430 per U.S. dollar at 1:09 p.m. New York time, from 1.6630 on Feb. 25. It increased 0.4 percent today. Twenty-three of 25 emerging-market currencies tracked by Bloomberg gained against the dollar this week.

Federal Reserve Chairman Ben S. Bernanke testified before the U.S. Congress this week that there are “grounds for optimism” about the country’s labor market in coming months. Initial jobless claims declined last week to the lowest level since May 2008, the U.S. Labor Department said yesterday. The unemployment rate in the world’s biggest economy fell to 8.9 percent in February, the lowest level in almost two years, according to data released today by that department.

“The markets are optimistic in general,” said Reginaldo Galhardo, a foreign exchange manager at Treviso Corretora, a Sao Paulo-based brokerage. “The U.S. data came in good.”

The real strengthened this week even as the central bank bought dollars in the forward and spot currency market, and made bets against the real in futures markets as part of an effort to curb the appreciation of the currency. The real has gained 41 percent since the end of 2008, the most among emerging-market currencies tracked by Bloomberg during that period.

Policy makers said they bought an unspecified amount of dollars today in the forward currency market at 1.6538 reais each for liquidation on April 4. The central bank also said it purchased the U.S. currency in the spot market for 1.6464 each.

The yield on the interest-rate futures contract due in January 2012 rose 1 basis point, or 0.01 percentage point, to 12.56 percent. The yield on the contract has fallen 5 basis points this week.

To contact the reporters on this story: Josue Leonel in Sao Paulo at jleonel@bloomberg.net; Ben Bain in New York at bbain2@bloomberg.net;

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulous@bloomberg.net

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