BRASILIA (Reuters) – Brazil’s real rose for the fifth day in a row on Tuesday, sealing its longest winning streak against the dollar this year as buoyant global markets and ebbing of domestic political tensions added fuel to the rally.

The real’s near 2% jump brought its gains since the start of last week to around 10%, and a dollar fall below 5.00 reais now seems more likely than a pierce up through 6.00 reais, traders said.

“There’s still a lot of room for recovery. 5.00 (reais) is still high for the dollar,” said Cleber Alessie Machado, broker at Commcor DTVM in Sao Paulo.

“If the political situation cools and impeachment is taken completely out of the question… yes, we could go back to 5.00 and below,” he said, noting growing optimism that a global economic recovery could soon start as the world emerges from coronavirus lockdown.

Pressure on President Jair Bolsonaro built up this month due to his alleged role in changing senior federal police officials amid investigations of members of his political clan.

The real traded as high as 5.3350 per dollar BRBY and continued its close correlation with local interest rates. A flattening curve between short- and long-term rates is a sign of improving investor sentiment and easier financial conditions.

(GRAPHIC – Brazil FX and rates futures: here)

This follows central bank president Roberto Campos Neto’s reaffirmation last week that the bank stands ready to dip into its large pool of foreign exchange reserves and continue intervening in the market if needed.

That helped defuse some of the gloom surrounding the real and punctured the consensus view that a fall through 6.00 per dollar was inevitable.

“The real was very unloved (but) ran out of dollar buyers at 5.95. It was a bit too extended,” said a hedge fund manager in Sao Paulo.

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