The Brazilian real and the Mexican peso are among the most affected currencies after the US election. In Brazil, the US dollar reached today the highest level since June and it gained more than 6% since Trump’s victory.
USD/BRL accelerated to the upside today. Initially broke 3.25 and then the strong resistance at 3.30. It jumped to 3.38 before it pulled back to 3.35, where currently trades, up 4.15% for the day. The pair is breaking key technical levels opening the doors to medium term gains. Two weeks ago it traded at 3.10, the lowest since July 2015.
Despite the losses of the last days, the Brazilian real continues to be among the top performers in the currency market so far 2016.
The central bank of Brazil announced a suspension of an auction of currency swaps contracts for today, probably because of the volatility in the currency market. The mechanism (reverse currency swaps) were used to limit the real’s appreciation.
Most emerging market currencies are under pressure today affected by the uncertainty that surrounds Trump’s policies. Many fear about an increase in protectionism and in interest rates that would hurt global trade and capital inflows.
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