Brazil: BRL now seems more aligned with global market moves - Rabobank
|Analysts at Rabobank, see the USD/BRL pair at 3.70 by year-end. The Brazilian real is about to end the week at 3.85, a weekly decline of 0.2%.
Key Quotes:
“After a re-pricing of domestic (electoral, budgetary) risks in Brazilian assets, the BRL now seems more aligned with global market moves, especially if we take into account its historical high-beta pattern. In a way, this less idiosyncratic BRL sell-off favours interpretations that the Brazilian FX market is more functional at this stage. This certainly helps the Brazilian Central Bank (BCB) keep a more neutral stance, as in recent weeks. After selling USD 43 billion in FX swaps, the monetary authority has been holding its FX swap inventory flat at USD 67.4 billion.”
“Yet our baseline scenario - which by hypothesis assumes the approval of reforms in 2019 - has a country risk projection of 180bps at the end of this year, which is consistent with our yearend BRL projection of 3.70.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.