Brazil Real Climbs as China Measures Buoy Commodity Currencies

Brazil’s real rose, joining a rally in currencies from commodity-exporting nations, as China’s efforts to shore up growth sparked a bounce in prices for raw materials.

The real strengthened from a 12-year low after China, Brazil’s largest trading partner, cut interest rates and lowered the amount of cash banks must set aside. Commodity prices climbed the most in two weeks, sparking gains in Russia’s ruble, South Africa’s rand and Chile’s peso.

The real’s rally provides some relief to investors after the currency posted losses in eight of the past nine weeks amid concern that President Dilma Rousseff will struggle to contain a widening corruption scandal and revive a shrinking economy. Doubts about her ability to push new laws through Congress were raised again as Folha and Estado newspapers reported that Vice President Michel Temer told Rousseff he will scale back his role as the government’s main political coordinator.

“The short-term traders are trying to catch the risk assets such as the real at dips to recover losses that have been suffered over the past sessions,” said Ipek Ozkardeskaya, a market analyst at London Capital Group Ltd. “Recovery is, however, expected to remain limited given the political dimension of the Brazilian market.”

The real advanced 0.7 percent to 3.5295 per dollar at 9:44 a.m. in Sao Paulo. Swap rates, a gauge of expectations on interest-rate moves, declined 0.07 percentage point to 14 percent on the contract maturing in January 2017.

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