The Brazilian real climbed almost 1% against the dollar on Thursday, as a rout on Wednesday led to a technical correction and a key poll showed Brazil's left failing to gain steam in presidential elections scheduled for October.
On Wednesday, the real led losses across the region, falling over 2%, as lingering trade concerns weighed on currencies across the region. A decision by a Supreme Court Justice that all privatizations in Brazil must be approved by Congress also hit the currency.
However, traders saw an opportunity to buy back in on Thursday, pushing the currency up 0.92% against the dollar.
The poll conducted by industry group Ibope showed far-right congressman Jair Bolsonaro leading with 17% of voters' intentions, followed by environmentalist Marina Silva. Center-left populist Ciro Gomes registered 8% of voter intentions.
While Bolsonaro's comments on various social issues are distasteful to many and he supported interventionist economics until recently, many see his leftist rivals as more of a threat to the health of the Brazilian market.
”Internally, the Ibope poll contributed (to the real's rise), as it showed a left without momentum,” said José Faria Júnior, head of Sao Paulo consultancy Wagner Investimentos.
Elsewhere in Latin America, the Mexican peso also rose strongly, climbing 1.27% against the dollar, after falling on Wednesday. Traders also said that a downward revision in first-quarter U.S. GDP growth figures helped push the greenback down against emerging market currencies.
Across the region, equities markets were mixed with Brazil's benchmark Bovespa index the big winner, climbing 1.65%. Gains among heavily weighted banking stocks such as Banco Bradesco SA and Itau Unibanco Holding SA, which were both up over 1.5%, supported the index as traders bought in following significant losses on Wednesday.
Rising stocks outnumbered declining ones on the Bovespa Stock Exchange by 250 to 156 and 39 ended unchanged.USD/BRL was up 0.01% to 3.8613, while EUR/BRL rose 0.12% to 4.4661.