Brazil’s real led global gains amid signs President Dilma Rousseff will avoid impeachment and win support for fiscal measures avoiding a junk credit rating.
The currency posted its first weekly advance since June as Valor Economico cited government estimates that more than 200 lawmakers wouldn’t vote for impeachment and after Senate President Renan Calheiros said he opposed attempts to increase public spending. While Rousseff faces a weekend of nationwide protests, she got a reprieve when Moody’s Investors Service assigned a stable outlook as it cut Brazil to the lowest level of investment grade Aug. 11.
“Markets are desperately seeking some good news,” Reginaldo Galhardo, a foreign-exchange manager at brokerage Treviso Corretora de Cambio in Sao Paulo, said by telephone. “The real has been under a lot of pressure.”
The real appreciated 1 percent to 3.4827 per dollar at the close of trading Friday, the best performance among 31 major currencies tracked by Bloomberg. The local tender gained 0.7 percent since Aug. 7.
The currency climbed as developments over the past week provided some relief for Rousseff.
O Globo published an editorial criticizing Congress for feeding a political crisis that aggravates economic turmoil, and Brazil’s audit court granted the administration 15 additional days to respond to questions over Rousseff’s accounting in 2014.
Brazil’s failure to meet fiscal goals, a contracting economy and Rousseff’s record low popularity have pushed the real down 23 percent this year.
The third mass protest against Rousseff this year is scheduled for Sunday. The Free Brazil Movement, one of the groups organizing the demonstrations, says rallies are planned in 114 cities.
Swap rates, a gauge of expectations for Brazil’s borrowing costs, declined 0.05 percentage point to 13.88 percent on the contract maturing in January 2017, retreating 0.43 percentage point this week.
The central bank extended the maturity Friday on 11,000 foreign-exchange swap contracts supporting the currency, up from 6,000 daily earlier this month.