6/7/2020 Mercury Reader

investing.com

Brazil's real surges through

5.00 per dollar, chalks up best
week since 2008
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© Reuters.

By Jamie McGeever

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6/7/2020 Mercury Reader

BRASILIA (Reuters) - Brazil's real surged on Friday through 5.00

per dollar for the first time since March, sealing its biggest weekly
rise in nearly 12 years after surprisingly strong U.S. employment
data sparked a buying spree in riskier, beaten down assets.

The real, long the pariah on international foreign exchanges and

one of the worst performing currencies this year, rose 7% against
the dollar this week, its strongest performance since October
2008 and one of the biggest weekly gains on record.

(GRAPHIC: Brazil real - spot:

https://fingfx.thomsonreuters.com/gfx/mkt/rlgpdkqwmvo/BRLSPOT.p

(GRAPHIC: Brazil real - weekly change:

https://fingfx.thomsonreuters.com/gfx/mkt/oakpeqjgkpr/BRLWEEKLY.

The real closed up 3% on Friday, hitting an intraday high of 4.9340

per dollar () as traders who have been short the currency
scrambled to cover their positions and cut their mounting losses
as the rebound gathered pace.

The improving global picture, greater investor appetite for risk

and a calmer domestic political scene boosted the real's upswing.
It has now rebounded more than 20% from its record low near
6.00 per dollar in mid-May.

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"The real may trade better than peers in an emerging-market

friendly environment, considering heavy dollar long positions," Citi
strategists wrote in a note on Friday.

"People are short emerging market FX, and within emerging

markets they are underweight the real," one hedge fund manager
in Sao Paulo said.

Figures on Friday showed that the U.S. economy unexpectedly

added jobs in May after suffering record losses in April, a sign that
the downturn triggered by the coronavirus pandemic may be over.

This sparked a widespread rally across equity, credit and emerging

markets, and a sell-off in safe-haven U.S. Treasury bonds.

Meanwhile, Commodity Futures Trading Commission data on

Friday showed that funds and speculators increased their net
short Brazilian real position slightly to 12,003 contracts in the
latest week, the largest net short position in two months.

But that is about a quarter of the size of the short position held in
early March, indicating that positioning is still fairly light.

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