By Jamie McGeever
BRASILIA, May 17 (Reuters) - Funds and speculators on U.S. futures markets are going long on the Brazilian real for the first time in almost two years, data showed, accompanying a surge in 2021 interest rate and economic growth expectations.
With inflation rising and the central bank pushing an aggressive start to its rate-hiking cycle, the recent turnaround in funds' net positioning on the Commodity Futures Trading Commission has been one of the quickest on record.
Figures released late on Friday showed that funds were net long the real to the tune of 2,513 contracts in the week ending May 11, compared with a net short position of 9,898 contracts the week before.
To go long a financial asset is to effectively bet that it will rise in value, and to go short is the opposite.
It is the first time since August 2019 that CFTC positioning on the real has been net long. The change from a net short position of 26,286 contracts on April 27 represents the biggest two-week surge in bullish bets in more than six years.
"The news flow out of Brasilia remains quiet and this has continued to be conducive for BRL outperformance," strategists at Citi wrote in a note on Monday, adding that flows have been improving in recent weeks "particularly within the leveraged community."
In early March the real was close to 6.00 per dollar and down 10% year-to-date. In early trading on Monday it was changing hands at 5.28 per dollar, down around 2% since Jan. 1.
Recent data suggest Brazil's economy has held up against a deadly second wave of the COVID-19 pandemic better than many had expected, prompting a clutch of upward revisions to growth outlooks for 2021 to 4% or more.
With inflation running well above the central bank's 2021 target, policymakers have pledged another aggressive hike in interest rates in June to prevent 2022 inflation expectations from drifting higher.
(Reporting by Jamie McGeever; Editing by Hugh Lawson)