Brazil real rallies as traders cheer more ambitious fiscal target

Concerns that Temer’s administration could sacrifice fiscal austerity for support in a divided Congress had contributed to weakening the real for the five previous trading days.

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“The fiscal target represents a victory of the fiscal hawks inside the government, which is all the market wants to see,” said Leme Investimentos partner Paulo Petrassi. The positive tone spilled into stock markets, with Brazil’s benchmark Bovespa stock index rising for the third day in a row.

Shares of Estácio Participações SA were up 2.6 percent, and Kroton Educacional SA advanced 4.1 percent. Estácio’s board is scheduled to meet on Thursday to discuss a sweetened bid from Kroton, the world’s largest education company by market value.

The real advanced more than regional peers as Brazil’s central bank refrained from intervening to weaken the currency after doing so for five straight sessions.

Latin American currencies in general strengthened on Friday on a rebound in global risk appetite following stronger-than-expected US jobs data.

The figures are the latest sign of recovery in the world’s biggest economy, but traders bet they will not be enough to drive the US Federal Reserve to increase interest rates. Fed policymakers have repeatedly said they will look for clarity over the economic fallout from Britain’s decision to leave the European Union before tightening policy.