BRL: Growing presidential election risks spells more downside trouble - ING
|BRL continues to trade on a weak footing, which ING’s Gustavo Rangel believes is a function of early uncertainty over the presidential elections in October.
Key Quotes
“The markets preferred candidate, Geraldo Alckmin, is polling poorly and there’s little clarity on the policies of the other candidates. In the near-term, however, we think Brazilian agricultural exporters will take advantage of the >3.40 levels in USD/BRL to repatriate seasonal earnings. But we doubt any BRL rally lasts long and we now see greater risks of a move above 3.50 as we near the elections – fuelled by persistent political risk that could increase demand for hedging and exacerbate a sell-off in BRL towards previous all-time highs (ie, the 4.00 level).”
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