13 May 2015
USD/BRL above 3.2 and rates higher in Brazil – Rabobank
FXStreet (Edinburgh) - Christina Lawrence, Strategist at Rabobank, sees the Brazilian real losing further ground and the tightening cycle to continue.
Key Quotes
“BRL is the worst performing currency so far this year having lost 12.5% against USD, this, despite USD/BRL currently standing 8.5% off the high of 3.315”.
“CDS price action reflected the sell-off in BRL with much of the move north of 3.10 driven by fears over the ongoing corruption scandals and rising implementation risk with respect to FinMin Levy’s announced fiscal adjustments”.
“Headlines show support for reforms and the appointment of PMDB’s Temer as negotiator has been viewed as a positive”.
“That said, cracks remain under the surface and the resurgence of political woes could push USD/BRL back above 3.20 in short order”.
“We expect further SELIC hikes with inflation high but activity continues to disappoint”.
Key Quotes
“BRL is the worst performing currency so far this year having lost 12.5% against USD, this, despite USD/BRL currently standing 8.5% off the high of 3.315”.
“CDS price action reflected the sell-off in BRL with much of the move north of 3.10 driven by fears over the ongoing corruption scandals and rising implementation risk with respect to FinMin Levy’s announced fiscal adjustments”.
“Headlines show support for reforms and the appointment of PMDB’s Temer as negotiator has been viewed as a positive”.
“That said, cracks remain under the surface and the resurgence of political woes could push USD/BRL back above 3.20 in short order”.
“We expect further SELIC hikes with inflation high but activity continues to disappoint”.