Brazil’s real strengthened as commodity prices rallied amid speculation that the Federal Reserve will unveil further measures to support the U.S. economy this week, spurring global growth. The real advanced 0.7 percent to 1.5968 per dollar at 5 p.m. New York time, from 1.6078 yesterday. Prices for commodities, according to the UBS Bloomberg Constant Maturity Commodity Index, rose 0.9 percent amid speculation that Fed Chairman Ben S. Bernanke will signal additional measures to stimulate the economy. Bernanke is scheduled to speak Aug. 26 in Jackson Hole, Wyoming, at an annual conference sponsored by the Fed Bank of Kansas City. “With improvements in the external environment, risk assets end up rising,” Vladimir Caramaschi, the chief strategist at Credit Agricole do Brasil SA in Sao Paulo, said by phone. “The real is a risk asset.” Twenty-one of 25 major emerging-market currencies tracked by Bloomberg strengthened against the dollar. The increase in commodity prices is helping push the currencies of emerging-market commodity producers higher, Andre Perfeito, chief economist at Sao Paulo-based Gradual Investimentos, said in a telephone interview. ‘Hot Money’ Finance Minister Guido Mantega last month unveiled a plan to tax short dollar positions in the futures market. Since October, the government has tripled a tax on foreigners’ fixed- income purchases to 6 percent, increased costs for banks betting on the real and imposed restrictions on lenders’ borrowing abroad. Mantega is seeking to stem the real’s gains after it reached a 12-year high on July 26. The advance is crimping exporters’ profit margins and swelling the current-account deficit. Brazil can’t allow an invasion of “hot money” and must deter speculation in the derivatives market, Mantega said in Sao Paulo yesterday. The so-called global “currency wars” will continue in coming years, he said. The central bank said it bought dollars at 1.6015 reais in the spot market today. Regular dollar purchases are part of the central bank’s efforts to stem gains in the currency, which has strengthened 45 percent since the end of 2008. The country’s monetary council is empowered to set new margin requirements for derivatives operations in order to reduce their profitability, Mantega said today during a Senate hearing in Brasilia. The yield on Brazilian interest-rate futures contracts due in January 2013 fell three basis points, or 0.03 percentage point, to 11.43 percent. The yield on the contracts due in January 2012 rose two basis points to 12.13 percent. It indicates that traders anticipate the central bank will cut the benchmark Selic rate, currently at 12.50 percent, by at least 50 basis points this year, according to data compiled by Bloomberg. Creating conditions to cut interest rates in Brazil is a “priority,” Mantega said during the hearing. Lower rates would be “very healthy” because they would cut the cost of servicing the nation’s debt, he said. To contact the reporters on this story: Josue Leonel in Sao Paulo at jleonel@bloomberg.net; Benjamin Bain in New York at bbain2@bloomberg.net To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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