MercoPress. South Atlantic News Agency

Brazil’s market soars 83% in 2009 and Real appreciates 34% against US dollar

A great year for those who invested in Brazil

The performance of Brazilian stocks in 2009 has been one of the highest in the world while the local currency, the Real reflected the recovery of Latinamerica’s largest economy by appreciating 34% against the US dollar this year.

Brazilian stocks edged higher on Wednesday and posted hefty gains of about 83% for the year, underscoring the strength of the recovery in an economy viewed as an investor darling.

The benchmark Bovespa index moved up 0.43% to close at 68,588.41 points in volatile but low-volume trading. The index's 2009 gains of 82.66% stand in stark contrast to the Bovespa's performance in 2008, when it plunged 41.2%, its second-worst performance in its 41-year history.

The economic crisis that slammed the Bovespa last year has lingered in many parts of the world, making Brazil's second-quarter exit from recovery stand out that much more.

Brazil snagged a coveted third investment-grade rating in September, when Moody's Investors Service said the global crisis had helped prove the resilience in Latin America's largest economy.

Comparatively, Mexico, Brazil's closest peer in Latin America, saw its sovereign debt downgraded twice.

Two of the world's biggest initial public offerings came out of Brazil this year -- an 8 billion US dollars Santander offering, topping the list, and the 4.3 billion USD VisaNet sale. Economists expect Brazilian stocks to extend their advance in 2010.

Furthermore the money pouring in from abroad has helped the Brazilian currency, strengthen 34% against the greenback so far this year; the Real closed flat at 1.743 per dollar on Wednesday.

Sao Paulo-based consultant firm Economatica said the real's annual appreciation against the greenback was its strongest since the Brazilian currency was introduced in 1994.

In related news Brazil's Development Bank, or BNDES, revealed it made record loans worth 137 billion Brazilian Reals, or 79 billion US dollars in 2009. The value of the loans increased 49% compared with 2008, BNDES President Luciano Coutinho said in a press conference.

According to Coutinho, the record loans made this year strongly influenced Brazil's recovering investment rate, which was 17.7% of GDP, in the third quarter.

“I expect we will end 2010 at around 20% of GDP,” Coutinho said.

Coutinho said it was necessary to establish an investment rate at around 24% of GDP in the long term to sustain growth of 5.5% to 6% a year.

BNDES said that industry received 60.1 billion Reais of its credits in 2009, 54% more than in 2008 while infrastructure attracted 46.5 billion Reais, or 32% more than last year.