Brazilian Real Rises to One-Month High as U.S. Data Boosts Crude

(Bloomberg) -- Brazil’s real rose to a one month-high as a rebound in crude oil prices bolstered the outlook for export revenues.

The real gained 0.6 percent to 3.2385 per dollar on Wednesday after dropping as much as 1 percent. Crude oil for September delivery rose 4.2 percent, rebounding from a four-month low after data showed U.S. gasoline stockpiles declined the most since April last week. Raw materials make up half of Brazil’s exports.

“The real flipped as crude prices rebounded,” said Markus Casal, a trader at Ativa brokerage in Sao Paulo. “The external outlook is giving a boost to currencies that have links to oil.”

The real earlier fell on concern a bill that imposes fiscal discipline on states is being postponed after lawmakers stayed away from last night’s session, meaning there weren’t enough legislators to hold a vote. The currency strengthened 23 percent in the first half of the year amid optimism that Acting President Michel Temer can trim a budget deficit and restore confidence in an ailing economy. His team is seeking a $6 billion spending freeze as ministers and the president debate where cuts should fall.

"The lack of positive indicators in the fiscal front is generating discomfort for investors," said Joao Paulo de Gracia Correa, the head of foreign currency at brokerage SLW in Curitiba.

Swap rates on the contract maturing in January 2018, a gauge of expectations for interest rates, rose 0.01 percentage point to 12.83 percent.

To contact the reporters on this story: Paula Sambo in Sao Paulo at psambo@bloomberg.net, Vinícius Andrade in São Paulo at vandrade3@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Sebastian Boyd