Brazil's real advanced amid increasing speculation that animpeachment of President Dilma Rousseff is closer, offsetting anintervention by the central bank that signaled it may be seeking toput a damper on the currency's recent rally.

The real added 1 percent, to 3.5844 per dollar at 3:58 p.m. inSao Paulo, reaching the strongest in almost seven months, afterdropping as much as 0.9 percent earlier. The currency has surged 11percent this year, the most among its most-traded counterparts. Aindex of 20 emerging-market currencies rose 0.3 percent, halting atwo-day decline.

Traders pushed up the value of the Brazilian currency onspeculation that the PMDB party, which is part of thegovernment coalition but has wavered in its support over the pastyear, will cut ties March 29, as reported by Folha de S. Paulonewspaper. In the midst of rising impeachment risk, Rousseff isalready preparing to appeal to the Supreme Court to stop herouster, claiming the impeachment request has no legal basis, Folhawrote. Some investors and traders bet that a new government isBrazil's best hope for emerging from its recession and shoring upits fiscal accounts.

“The impeachment still is the main focus forinvestors, and there is room for the real to strengthen further,”said Cleber Alessie, a currency trader at H.Commcor DTVM in SaoPaulo. “It seems like the government is running out of cards it canput at the table to avoid it.”

An opinion survey published by the Datafolha polling firm onSaturday showed that support for impeaching Rousseff rose to 68percent, up from 60 percent in February. The Brazilian barassociation, which was influential in the country's return todemocracy in 1985 and the impeachment of President Fernando Collorin 1992, on Friday voted to back a proposal by lawmakers to removeRousseff from office.

Brazil's central bank placed 10,000 foreign-exchange reverseswap contracts Tuesday, equivalent to buying dollars in the futuresmarket, out of the 14,500 contracts it had offered. The movereverses a previous policy of using the swaps to help bolster thereal.

The central bank changed tactics after the real climbed 9.4percent against the dollar this year through Friday, more than anyother major currency in the world, as the drive to impeachRousseff gained momentum.

Alexandre Tombini, the central bank head, told Brazil's senateon Tuesday that the country's international reserves, which were atUS$374 billion as of March 18, give security to the local economyand have to be preserved at the level they are. Some localnewspapers reported last week that the government may tap reservesto boost growth.

“The impeachment process seems to be gathering pace, and overallinvestors like this,” said Georgette Boele, an ABN Amro Group NVstrategist in Amsterdam.

Swap rates on the contract maturing in January 2017, a gauge ofexpectations for Brazil's interest rates, fell 0.065 percentagepoint to to 13.715 percent.

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