By Renato Andrade

Brazil’s real rose for the first time this week on speculation higher stock prices and increased demand for commodities will sustain gains for the world’s second-best performing major currency this year.

The real climbed 1.3 percent to 2.0867 per U.S. dollar at 4:05 p.m. New York time.

“Brazil has the potential to leave the crisis in better shape and that’s been attracting investments to local markets, especially for stocks,” said Marianna Costa, chief economist at Sao Paulo-based Link Investimentos.

Net inflows of foreign currency reached $1.16 billion in the first week of May, according to data compiled by the central bank. In April the amount reached $1.4 billion, the highest since September, when the financial crisis deepened.

Brazilian exports to China boosted the country’s trade surplus in April to an 11-month high. Nearly two-thirds of the country’s exports are commodities.

The central bank bought U.S. dollars in the local spot market for a fifth consecutive day. The bank purchased an unspecified amount of dollars for 2.0903 reais each, according to a statement.

The real has gained 11 percent so far this year, the second-best performance among the world’s 16 most-actively traded currencies, behind South Africa’s rand.

Brazil’s local-currency bonds rose and yields reached a record low as the government’s plan to impose taxes on savings accounts and weaker-than-expected retail sales boosted speculation interest rates will be cut further.

Lower Rate Twice

The plan may give the central bank room to lower the benchmark interest rate twice over the next quarter, Bradesco Corretora said today.

The yield on Brazil’s zero-coupon bonds due January 2010 dropped four basis points, or 0.04 percentage point, to 9.41 percent. Earlier it touched 9.37 percent, the lowest since the security started trading in October 2007.

Brazil’s retail sales advanced less than forecast in March, a report showed today.

“The weaker-than-expected retail sales increases the outlook for a continuous reduction of interest rates,” said Francisco Carvalho, head of currency trading in Sao Paulo at Liquidez Corretora.

Policy makers cut the so-called Selic rate to a record low of 10.25 percent on April 29.

In the overnight interest-rate futures market, yields on contracts to January 2010, the most-actively traded on the BM&F commodity and futures exchange, declined three basis points to 9.36 percent.