Home »Money and Banking » World » Brazil’s real up against dollar, bucking Latam trend
Brazil's real strengthened against the US dollar on Wednesday, a day after new President Jair Bolsonaro took power, on hopes of reform to the pension system of Latin America's top economy, while most other Latin American currencies softened against the greenback. Brazil's new economy minister, Paulo Guedes, drafted a temporary executive decree for a pension reform that could save up to 50 billion reais ($13 billion) over the next decade, a report said.

"Strong opposition in congress is expected ... The strategy is to roll out a package of changes which don't require congressional approval," Citigroup head of emerging market strategy Dirk Willer and emerging markets FX strategist Kenneth Lam wrote in a note.

The news fed optimism in Brazil's securities markets. Sao Paulo's Bovespa stocks benchmark was trading up 0.4 percent on Wednesday, benefiting from gains in most sectors.

The real strengthened about 0.8 percent, while yields on local 10-year bonds neared a six-year low during the session. They last yielded 9.22 percent.

On Tuesday, former army captain-turned-lawmaker Bolsonaro promised to open foreign markets and enact reforms to reduce a yawning budget deficit, putting government accounts on a sustainable path.

Factory activity in China - an important destination for Brazil's resources exports - contracted for the first time in over two years in December.

Mexico's peso was little changed against the firm dollar, while the currencies of Chile and Colombia down 0.4 percent and 0.5 percent, respectively. Chilean stocks dipped 0.8 percent. Argentina's peso weakened about 1.3 percent against the greenback.

Copyright Reuters, 2019


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