Real up against USD despite political turmoul

In Brazil on Tuesday, the real was up 0.64 percent to 2.315 to the US dollar after having gone down as much as 0.43 percent earlier in the day. The currency advanced after a Treasury official said that the government will not need to buy dollars on the spot market at the moment.

It had been thought by some investors that the Treasury would begin to buy dollars as the real rose above 2.30 to the dollar, a 40-month high. Meanwhile, the Bovespa index on the Sao Paulo Stock Exchange was up by 1.01 percent to 26,982 on news that mild inflation may mean that the central bank might soon cut interest rates, currently at 19.75 percent, a 23-month high.

Stable interest rate futures showed that the market expects interest rate cuts to begin any time between next week and late September. Investors were also encouraged by anticipation of upcoming corporate earnings reports that are expected to be favorable.

Meanwhile, investors are still closely watching congressional testimony in the ongoing bribes-for-votes scandal that has dominated the news since June. Some are worried that the current testimony by a central figure in the scandal will reveal information drawing Brazilian President Luiz Inacio Lula da Silva and cabinet members further into the scandal.

Story link: Real up against USD despite political turmoul