The real, Brazil's currency, rose to the strongest level in more than a year after a statement from the Group of Seven's leaders lacked support to stem the dollar's slide against major currencies, prompting investors to buy higher-yielding assets.
The real climbed 1.3% to 1.7598 per US dollar from 1.7820 on October 2. Earlier it touched 1.7594, the strongest since September 9, 2008. Monday's rise extended the real gain to 32% this year.
The G7 met at the end of a week in which policy makers from France to Canada signaled concern that a sliding dollar risks impeding their recoveries from the deepest global recession since World War II.
The US dollar has dropped 13% against a basket of seven currencies since early March.
"Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability," G7 ministers and central bankers said in a statement after talks over the weekend in Istanbul.
As a result, on Monday, 22 of 26 emerging-market currencies gained against the dollar, led by a 2.2% rise in the South African rand.
The real extended gains after Brazil posted a weekly trade surplus of US$ 415 million in the period ended October 4, reversing two consecutive weeks of trade deficits, the Trade Ministry reported Monday.
Demand for higher-yielding currencies was also fueled after a report showed US service industries expanded in September for the first time in a year, as the emerging recovery spread from housing and factories to the broader economy.
The US Institute for Supply Management's index of non-manufacturing businesses, which make up almost 90% of the US economy, rose to 50.9, higher than forecast, from 48.4 in August, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction.
Brazil's heavy investment inflows were also bolstered by interest in Banco Santander's (STD) local stock offer, for which Monday was the last day to reserve shares.
Santander is planning to raise between 11.55 billion and 13.12 billion reais through its offer of shares in its Brazilian unit, making this one of the largest IPOs in the world this year.
With the return of international market liquidity, investors are once again attracted to Brazil's comparatively high real interest rates. The benchmark Selic rate stands at 8.75% per year, although analysts expect it to rise again over the next year. The official IPCA inflation rate was 4.36% through August.
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