Brazil stocks jump with credit boost

Brazil’s stock market soared Wednesday to a record high and the nation’s currency rose to a six-year high against the dollar after Standard & Poor’s raised its credit rating for the country, moving it closer to coveted investment-grade status.

The market moves helped add to gains of emerging-market stock mutual funds owned by U.S. investors, because many of the funds have large holdings in Brazil.

The Bovespa index of the Sao Paulo Stock Exchange surged 1,219.35 points, or 2.4%, to a record 51,737.56, boosting its year-to-date advance to 16.3%.

The rally gained steam after S&P; raised Brazil’s long-term foreign sovereign credit rating one notch to “BB-plus” from “BB,” a week after a similar move by Fitch Ratings. S&P; cited prudent economic policies and improved fundamentals.

One more notch -- to BBB -- would give Brazil investment-grade status.

The move by S&P; “is only going to encourage more foreign investors to pour money into Brazil,” said Julio Cesar Vogeler, a currency trader at Didier Levy brokerage in Sao Paulo.

“In the eyes of many investors, Brazil is already an investment-grade market, and this latest upgrade is an important stamp of approval,” said Caio Megale, who helps manage $1.2 billion at Maua Investimentos in Sao Paulo.

Brazil’s currency, the real, finished the day at 1.953 per dollar, down from 1.983 on Tuesday and the lowest since 2001. Fewer reals per dollar means Brazil’s currency is gaining value at the dollar’s expense.

The real has been rising as booming commodity exports have helped bolster Brazil’s economy. The currency’s strength gives Brazilians more purchasing power but also threatens exports by raising their cost for foreign buyers.