The Brazilian currency rebounded its previous week losses posting two
days of significant gains versus main currencies before a massive IPO in
the nation’s stock exchange, which is likely to attract a great influx
of foreign capital to the country’s financial system.
The real had a poor performance in the beginning in the week as world
equities markets slid due to a sudden rise in risk aversion after a
World Bank report indicating that the global slump may be deeper than
previously expected, but as stocks succeeded to rebound, the Brazilian
currency returned to rally. VisaNET, which is the Brazilian subsidiary
of Visa Inc., will start its operations in the Brazilian Stock Market
this week, and its IPO is likely to raise $5 billion from investors
which will tend to be, in their majority, of foreign origin, creating
confidence in Brazilian markets and providing support to the national
currency to raise sharply, to the point the national central bank
purchased dollars in order to stop Brazil’s real daily gains yesterday.
The situation is rather confusing for the Brazilian real at the moment,
as analysts affirm that massive IPOs like these of VisaNET are very
favorable for the national currency, but being the real a high-yielding
currency extremely linked with the price of commodities, real’s fate
will rely mostly on the world economic recovery for the next months.
USD/BRL traded at 1.9683 as of 9:54 GMT from a previous price of 1.9830.
If you want to comment on the Brazilian real’s recent action or have any
questions regarding this currency, please, feel free to reply below.
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