Brazil Real Closes Stronger As Risk Aversion Eases

Tue, Aug 18 2009, 19:44 GMT
http://www.djnewswires.com/eu

Brazil Real Closes Stronger As Risk Aversion Eases

By Alastair Stewart

Of DOW JONES NEWSWIRES

SAO PAULO (Dow Jones)--The Brazilian real closed stronger against the U.S. dollar Tuesday as global investors recovered some appetite for risk.

The real ended at BRL1.847 per dollar on the BM&FBovespa exchange, stronger than Monday's close of BRL1.867.

International risk appetite stabilized after Monday's jitters following decent European data, which reflected gains in equity markets. Declining producer price data in the U.S. only served to underline ideas that the U.S. economy was still very weak. But local investor nerves eased after U.S. stocks rose Tuesday.

Meanwhile, local inflation remained under control. The consumer price index for Brazil's largest city, Sao Paulo, rose 0.43% in the period, compared with a rise of 0.35% seen in the four weeks ended Aug. 7. The figure was in line with market forecasts for an increase of between 0.35% and 0.45%.

As for credit markets Tuesday, interest rate futures contracts on the BM&FBovespa exchange were flat to slightly higher, despite the benign local inflation outlook, on positive European economic indicators and rising employment data here.

The Labor Ministry reported that a net of 138,402 posts were created in July, up 0.4% from the previous month.

The most actively traded interest rate futures contract, that of January 2010, closed flat at 8.60%.

The contracts reflect investor expectations for annualized interest rates at future dates.

-By Alastair Stewart, Dow Jones Newswires; 5511 2847-4520; alastair.stewart@dowjones.com

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August 18, 2009 15:44 ET (19:44 GMT)Copyright 2009
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