- President Rousseff booed in Congress when proposing CPMF tax
- Finance Minister scheduled to meet Moody's on Wednesday
The real gained along with emerging-market currencies as commodities advanced, offsetting speculation the country is set to be cut to junk by a third rating company.
The real rose 0.7 percent to 3.9632 per dollar at 10:07 a.m. in Sao Paulo. A gauge of 20 emerging-market currencies gained 0.3 percent.
The real, the best-performing currency in the region this year, led gains in Latin America as West Texas Intermediate crude rallied after the steepest two-day drop in seven years and an index of industrial metals rose. Commodities, which account for about half of Brazil’s exports, rebounded on speculation that cuts in supply will boost prices, bolstering the currencies of exporters such as Canada and Russia as well as Brazil.
"Stabilization in commodities, but also in oil, seem to lend support to the real," said Ipek Ozkardeskaya, an analyst at London Capital Group. "Still, Rousseff has to play a very delicate game. She is under domestic and international pressure to strengthen her financial position."
Legislators booed President Dilma Rousseff as she urged Congress to approve the revival of the CPMF, a financial transaction tax. The president also proposed caps on spending and cuts in pensions. While efforts to oust her lost momentum during Congress’s end-of-the-year recess, the legislators’ reaction to her proposals suggest she faces stiff opposition to measures designed to cut the nation’s deficit.
The currency has fallen 32 percent in the past year as Brazil’s economy shrank and Fitch Ratings and Standard & Poor’s cut the country to junk. Some government officials believe a downgrade by Moody’s Investors Service is inevitable, according to a report in O Estado de S. Paulo. Moody’s is scheduled to meet Finance Minister Nelson Barbosa on Wednesday.