The Brazilian Real surged to a 4 ½ year high against the USD today, on the heels of strong economic growth and stratospheric interest rates. Brazil is currently among the strongest economies in the developing world, often lumped in the same category as China, India, and Russia. Investment in fixed capacity has spurred significant increases in production and exports, and hence, GDP. In addition, Brazil’s federal funds rate currently exceeds 19%, a level that has made foreign creditors all too eager to lend to Brazil. In fact, Standard and Poor’s, an international rating agency, recently raised its rating on Brazilian government bonds, a move which will surely suck in more foreign capital, and provide additional support for the Real. The Financial Times reports:

The real was further aided by a government announcement that it planned to sell more bonds maturing in 2015, a move likely to increase portfolio inflows into Brazil even further. The real has now risen 31.7 per cent against the dollar since May 2004.

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