--Brazil real at BRL2.0330 in early trading vs. BRL2.0373 Thursday
--Investors cheered by Chinese GDP figures within expectations
--Brazilian real likely to trade within narrow range
By Tom Murphy
SAO PAULO--The Brazilian real strengthened slightly in early trading
Friday after release of Chinese economic growth data that came in
within market expectations.
The real was trading at BRL2.0330 to the dollar early in Friday's
session, slightly stronger than Thursday's close of BRL2.0373,
according to Tullett Prebon via FactSet.
The Chinese government released gross domestic product figures for the
second quarter, showing year-on-year growth of 7.6%. Although lower
than the 8.1% growth figure for the first quarter, the second quarter
figures were still considered strong and came within financial market
expectations.
China is especially important for Brazil because it is Brazil's
biggest trade partner and a major customer for Brazilian commodities.
Strong growth in China means strong dollar inflows for Brazil.
"As in recent days, the Brazilian foreign exchange market continues to
be influenced by overseas trends," said Mauro Araujo, a trader at Sao
Paulo's Vision brokerage. "The Chinese news was generally favorable.
Trading should be calm today, with few surprises."
Global commodities prices also gained Friday after release of the
Chinese data. Higher commodities prices tend to boost Brazilian export
revenues.
But traders and analysts expect the real to continue trading within a
fairly narrow range, at least for the next few days.
"I wouldn't expect to see a range beyond BRL2.00 to BRL2.08 to the
dollar in the next few days," said Mr. Araujo.
Brazil's central bank has turned highly active whenever the real
breaks through either side of a band from BRL2.00 to-the-dollar
through BRL2.10 to-the-dollar.
"This seems to be the range the Brazilian Central Bank is comfortable
with," said Daniel Moreli Rocha, Chief Brazil Strategist for Banco
Indusval and Partners. A real stronger than BRL2.00 to-the-dollar
hurts exporters, he said, while a real weaker than BRL2.10 tends to
pump up inflation.
Mr. Rocha said the BRL2.00-2.10 range could stick for weeks, or even
months, to come.
-Write to Tom Murphy at tom.murphy@dowjones.com
(END) Dow Jones Newswires
July 13, 2012 09:07 ET (13:07 GMT)
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