(Bloomberg) -- Brazil's real advanced as President Michel Temer sought support for a bill to cap spending while a rise in raw-material prices spurred a jump in currencies of commodity-producing nations.
The real climbed 1.1 percent to 3.2213 per dollar Wednesday in Sao Paulo, extending its gain this year to 23 percent. The Bloomberg commodities index rose 0.7 percent, the most in a week. Materials such as iron ore, soybeans and oil account for more than half of Brazil's exports.
Brazilian assets, which have led global gains this year on speculation a change in government could help pull Latin America's biggest economy out of recession, had retreated in the past month on concern Temer would struggle to push his economic policies through Congress. Some of the concern was alleviated when Temer scheduled a dinner for Sunday with about 350 coalition lawmakers to seek support and make sure they are in Brasilia on Monday morning to vote.
"The expectations for the local political scenario are pushing up the real," said Italo Abucater, the head of foreign-exchange trading at Icap Brasil, who expects the real to rise to 2.9 per dollar by November. "Commodities and the positive external scenario are also contributing to the currency's rise. Let's just hope these good winds continue blowing."
Swap rates on the contract maturing in January 2018, a gauge of expectations for interest-rate moves, dropped 0.09 percentage point to 12.08 percent.
--With assistance from Ney Hayashi To contact the reporter on this story: Paula Sambo in Sao Paulo at psambo@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Sebastian Boyd, Jessica Brice
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