Brazilian Real Posts the Biggest Weekly Increase in a Month

March 4 (Bloomberg) -- Brazil’s real posted the biggest weekly gain in a month as increased investor confidence in global economic growth boosted demand for emerging-market currencies.

The real gained 0.5 percent this week, the most since the period ended Feb. 4, to 1.6546 per U.S. dollar at 4 p.m. New York time. Twenty-three of 25 emerging-market currencies tracked by Bloomberg gained against the dollar this week.

The currency erased gains today, dropping 0.3 percent, after Sao Paulo-based news service IG reported on its website the government may introduce new measures next week to curb the real’s appreciation, without saying where it obtained the information.

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.

U.S. Data

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

Brazil’s central bank continued this week to buy dollars and make bets against the real in the futures market as part of an intervention effort to curb the appreciation of the currency. Policy makers said they twice bought the U.S. currency in both the forward and spot markets today. The real has gained 40 percent since the end of 2008, the most among emerging-market currencies tracked by Bloomberg during that period.

Finance Minister Guido Mantega together with the country’s central bank are studying possible measures to curb the currency’s appreciation, wrote Guilherme Barros, a columnist at IG on the news service’s website. The government may announce new tactics, including an increase of a tax on foreign fixed income investments and stricter controls of foreign capital, on March 9 or 10, Barros wrote.

The central bank declined to comment in an e-mailed statement. The Finance Ministry also declined to comment, according to a spokesperson, who asked not to be named because of internal policy.

The yield on the interest-rate futures contract due in January 2012 rose 2 basis points, or 0.02 percentage point, to 12.57 percent today. The yield on the contract fell 4 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