Brazil Real Closes Stronger As Investors Discount Global Gloom

SAO PAULO (Dow Jones)--The Brazilian real closed stronger against the dollar Tuesday, as investors looked beyond the gloomy global investment climate and moved back into local assets.

The real ended at BRL1.7440 to the dollar in trading on the Brazilian Mercantile and Futures Exchange, or BM&F, stronger than Friday's close of BRL1.7537.

The local currency slipped in early trade as investors sought the protection of dollar-based assets following news that CIT Group Inc.(CITGQ), a major lender to small businesses, filed for bankruptcy-court protection and Royal Bank of Scotland Group PLC (RBS, RBS.LN) will receive a GBP25.5 billion capital injection from the U.K. government to keep it afloat.

However, investors put aside the gloomy global outlook and moved back into local assets, emboldened by news that Brazilian miner Vale SA (VALE, VALE5.BR) will issue 30-year overseas bonds.

Early in the day, the Brazilian Census Bureau, or IBGE, reported September's industrial output rose 0.8% from August, which was at the low end of expectations.

As a result, interest-rate futures contracts on the BM&F reflected expectations of lower rates.

The most actively traded contract, that of January 2011, closed at 10.25%, compared with Friday's close at 10.34%.

-By Alastair Stewart, Dow Jones Newswires; 5511 2847-4520; alastair.stewart@dowjones.com

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(END) Dow Jones Newswires

November 03, 2009 13:18 ET (18:18 GMT)


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