The Brazilian real closed a tad stronger to hit a 13-month high against the dollar Friday, despite the greenback's strengthening against other major currencies. The real closed at BRL1.736 to the dollar in trading on the Brazilian Mercantile and Futures Exchange, or BM&F, stronger than Thursday's close at BRL1.739. The real benefited from continuing foreign investor confidence in Brazil, which continues to invest strongly in local equities as the economic recovery firms. The Brazilian Central Bank intervened around midday to buy dollars on the spot market at BRL1.7395 to reduce liquidity. Brazil's government has plans to set up a new sovereign fund to invest dollars bought on the spot market, local business daily Valor Economico reported Friday. The sovereign fund would be invested in Brazilian treasury bonds, according to the report. The Finance Ministry had no immediate comment on the report. The central bank has been buying dollars at regular spot market auctions since May in order soak up excess investment dollars on the local market. The dollars go into reserves, which totaled $227 billion last Wednesday. Meanwhile, interest-rate futures contracts were mostly higher Friday as investors on the BM&F were slightly skittish. The most actively traded contract, that of January 2011, closed at 10.47%, slightly higher than Thursday's close at 10.45%. The contracts reflect investor expectations about annualized interest rates at future dates. Brazil's financial markets will be closed Monday for a public holiday and will reopen Tuesday.
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