Brazil's Real Rises as Commodities Climb on Chinese Export Data

  • Raw materials advance as China’s trade surplus widens
  • Retail sales in Brazil unexpectedly rose in November

Brazil’s real rose for a second day after retail sales unexpectedly rose and emerging-market currencies gained on a report showing Chinese exports increased.

The real advanced 0.3 percent to 4.0167 per dollar Wednesday in Sao Paulo. The Bloomberg Commodity Index, which touched a record low on Tuesday, rose after China’s trade surplus widened and exports recovered. Commodities account for about half of Brazil’s exports.

China, Brazil’s top trading partner, imported a record amount of crude last year as oil’s lowest annual average price in more than a decade spurred stockpiling and boosted demand from independent refiners. Iron-ore imports jumped to a record last month, while steel exports climbed as the nation sells its glut overseas.

"China’s import of major commodities seems to remain on trend, which is a relief for Brazil," said Camila Abdelmalack, an economist at CM Capital Markets in Sao Paulo. "The positive surprise in the retail sales is helping in the good mood towards Brazilian assets today. However, this is not enough to revert expectations of a very deep recession."

Retail sales surged 1.5 percent in November after a revised 0.5 percent increase in October as buyers took advantage of holiday discounts, the national statistics agency said Wednesday. Economists had expected a contraction.

A second straight month of rising retail sales may give the central bank additional freedom to boost borrowing costs next week, as it struggles to contain above-target inflation without slowing activity in an economy that shrank in the first three quarters of last year.

Morgan Stanley on Wednesday recommended using a bounce in emerging-market currencies as an opportunity to reduce holdings.

Swap rates on the contract maturing in January 2017, a gauge of expectations on interest-rate moves, dropped 0.055 percentage point to 15.465 percent.

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