Brazil's stocks notched yet another record high on Friday thanks to strong foreign investor appetite for assets in Latin America's largest country, while the local currency slipped from a four-year high because of expiring options.
The Bovespa index of the Sao Paulo Stock Exchange closed 1.2 percent higher at 31,583 points. It gained 12 percent this month and broke a string of record highs. The previous record, set this week, was 31,564.
Bellwether Tele Norte Leste Participacoes rose 0.93 percent at 36.74 reais.
Steelmaker Acesita led gainers. The shares rose 11.29 percent to 35.50 reais after shareholder Arcelor said it would exercise an option to boost its stake in the company and gain a majority of its voting shares.
Investors have poured money into Brazil because of its strong economic fundamentals even as a bribes scandal has hobbled President Luiz Inacio Lula da Silva's government since June.
Meanwhile, the real weakened 0.77 percent to 2.23 a US dollar, leaving gains for September at 5.4 percent, the most for any month in more than two years.
The average trading price Friday will be used as the settlement rate for currency options expiring at Brazil's Commodities & Futures Exchange so currency traders sought to set a favourable rate for the real on Friday.
The local currency has rallied in the last week to its strongest levels since May 2001 on heavy dollar inflows from exports and overseas bond sales, along with a high benchmark interest rate of 19.5 percent that has lured foreign investors to Brazil.
"In the short-term, if the central bank doesn't enter the market, the real could go to 2.20 or 2.10," said Alex Agostini, economist at Global Invest.
The real's rallies have boosted expectations the central bank may resume buying dollars on the spot market to rebuild foreign reserves and, as a result, weaken the real to keep exports competitive.
The last time the central bank bought dollars was in March and on Thursday it warned it could return "at any moment."
"We're always expecting an intervention by the central bank," said Miriam Tavares, head of currencies at the AGK brokerage in Sao Paulo. "But, in my opinion, the tendency for the real to strengthen should slow down a bit.
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