Brazil Real Advances to 11-Month High as Risk Appetite Improves

  • Real is top gainer this year on bets fiscal crisis is easing
  • Rousseff’s former minister detained in corruption probe

Brazil’s real advanced along with emerging-market currencies worldwide as commodity prices rallied amid improved appetite for riskier assets.

The currency rose 1.2 percent to 3.3376 per dollar on Thursday, the highest level since July 2015. The real has surged 19 percent in 2016, the world’s best performance. A gauge of emerging-market currencies advanced as two polls conducted before Thursday showed a lead for the campaign to keep Britain in the European Union.

Investors have been glued to the U.K.’s debate on EU membership in recent weeks as governments and central banks around the world warned that a vote for a so-called Brexit could hurt global economic growth and destabilize financial markets. That debate has added to Brazil’s own struggles as a new administration takes measures to pull Latin America’s largest economy out of its worst recession in a century.

"Amid this solid risk appetite and the risk rally, carry traders are not missing the opportunity to drive some cash into Brazil," said Ipek Ozkardeskaya, an analyst at London Capital Group.

On Thursday, Brazilian police detained a former minister who served in suspended President Dilma Rousseff’s administration as part of a probe into alleged bribes involving technology contractors and Planning Ministry workers. Paulo Bernardo, who was the planning minister under former President Luiz Inacio Lula da Silva and communications minister under Rousseff, didn’t engage in any wrongdoing, according to his lawyer.

Foreign investors have increased their bearish bets against Brazil’s currency in the futures market for the 11th straight session, according to data compiled by Bloomberg and BM&FBovespa SA. That’s the longest streak in 11 years and marks a reversal from earlier this year, when short wagers declined amid speculation that a new government led by Acting President Michel Temer would revive the economy.

Brazilian swap rates on the contract maturing in January 2018, a gauge of expectations for interest-rate moves, dropped 0.03 percentage point to 12.66 percent.

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