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Bloomberg
Brazil’s real strengthened, defying a slump in emerging-market currencies, as reports that President Dilma Rousseff could be directly implicated in a widening corruption scandal fueled speculation she’ll be ousted.
Investors who think that a new government would be better positioned to lift the country out of its economic morass sent the real up 0.4 percent to 3.7722 per dollar at 7:57 a.m. in New York, leaving it at a three-month high. The currency was also boosted by a rally in commodities, which advanced for a seventh straight day. Brazil’s largest economy gets almost half its total export revenue from raw materials including iron ore and soybeans.
The real has posted the biggest gain this month among major currencies as speculation mounted that a corruption scandal that originated at the state-controlled oil producers and has spread to some of the country’s top politicians will bring about the downfall of Rousseff’s government. On Tuesday, newspapers in Brazil reported that top executives at two construction companies are seeking a plea bargain with prosecutors that could implicate Rousseff’s party in wrongdoing.
“Traders are closely watching all the political news and the possibility of new plea bargains, which could further implicate the current government in the largest corruption scandal we’ve seen in Brazil,†said Joao Paulo de Gracia Correa, a foreign-exchange director at SLW Corretora de Valores, in Curitiba, Brazil.
Swap rates on the contract maturing in January 2017, a gauge of expectations on interest-rate moves, fell 0.015 percentage point to 14.11 percent.