Real, Stocks Climb as Brazil Aims for Lower 2017 Budget Deficit

Paula Sambo and Denyse Godoy – Bloomberg, 07/08/2016

Brazil’s currency rose and stocks climbed to the highest in eight weeks after Finance Minister Henrique Meirelles said he would cut the budget deficit next year.

The real gained for the first day in six, strengthening 2.3 percent to 3.2906 per dollar at 3:41 p.m. in Sao Paulo. The benchmark Ibovespa equity index added 2.1 percent to 53,1117.73 as all but eight of its 59 stocks rose.

The government will target a budget gap before interest payments of 139 billion reais ($42 billion) next year, Meirelles told reporters in Brasilia. That compares with this year’s target for a primary deficit no wider than 170.5 billion reais. Local media had speculated the so-called primary deficit target would be around 150 billion reais. The government of Acting President Michel Temer is trying to restore confidence in the country’s budget management after Brazil lost its investment-grade rating in 2015.

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