Brazil's real gained on optimism inflows from exports and investments to Latin America's No. 1 economy will remain strong.

The real traded near a three-month high today on confidence that local assets will continue to pay attractive premiums amid expectations the U.S. Federal Reserve will hold its benchmark interest rate steady again next month, said Paulo Fujisaki at Socopa Corretora. The government said yesterday the July current account surplus rose to a record because of a surge in exports.

"Dollar flows are very strong and there's no reason why this scenario should change,'' Fujisaki, a foreign-exchange analyst, said in a phone interview. "The trade balance has also been very strong, and the prices of some commodities we produce will probably remain high, boosting commercial flows.''

The real rose 0.1 percent to 2.1389 to the dollar at 9:45 a.m. New York time from 2.1416 per dollar yesterday. The real traded as strong as 2.1260 per dollar Aug. 16, the highest since reaching an intraday high of 2.0968 on May 12. The currency has gained 12 percent in the past year, the best performance among 70 currencies tracked by Bloomberg.

The real's strength may be limited by expectations the central bank will step up dollar purchases on the spot currency market to slow the pace of the real's appreciation and boost foreign reserves, Fujisaki said. The bank has been buying the U.S. currency on the local market for the past six weeks.

(Published Bloomberg, August 18, 2006)
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