20000120

Brazil's real ends firmer on more capital inflows

SAO PAULO: The Brazilian real ended a tad firmer on Tuesday after more capital inflows helped the currency extend Monday's rally which took it to its six-month high, traders said.

The real finished at 1.793 per dollar, 0.06 percent above its previous close of 1.794, or at its strongest since July 29 when the real was at 1.792 per greenback.

"Just like we had predicted, the entry of dollars caused the dollar to drop again," said one trader.

Sentiment in the local currency market had been improving on expectations more foreign direct investment (FDI) would roll in this year, including that of Spain's Telefonica TEF.MC, which has said it would pour in 8.4 billion reais ($4.7 billion) in Brazil by the end of next year.

Economists expect FDI to total up to $25 billion this year.

News that Brazil was about to launch yet another foreign bond, of at least $1 billion, was also boosting the currency. It was only last week when the government issued its first international bond of 2000, raising 750 million euros in 10-year bonds.

Good demand behind those bonds was prompting the government to tap global capital markets again, traders said.-Reuters