Brazil Central Bank’s Support of BRL Watched Warily by Analysts
(Bloomberg) -- Recognized as the main reason for BRL out-sized strength compared to peers, BCB intervention is gaining some critics among market professionals.
- BRL, second most volatile currency only after ZAR, reversed early drop after BCB sold all 10.000 FX swaps contracts in a auction
- BCB also will auction 20,000 FX swap contracts for rollovers, 11:30am-11:40am local time
- BCB and Brazil Treasury, which has been repurchasing notes, are doing a “great job” amid a scenario of strong turbulence, Pablo Spyer, director at Mirae Asset Wealth Management, says in a phone interview
- High volatility to continue at least until the next FOMC meeting, specially for EM markets
- Risk aversion seen after Trump election was boosted by yesterday’s Yellen speech
- Swaps auctions are helping BRL, but should BCB continue intervening, the market may start questioning the bank’s discourse in favor of free FX floating regime, Paulo Nepomuceno, FI strategist at Coinvalores Ccvm, says
- Treasury likely to stop buy back auctions of fixed rates notes next week
- NOTE: Icap’s Abucater yesterday said FX calming down could open door for BCB to mute action in the market
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Pablo Spyer (Mirae Asset Global Investments)
Paulo Nepomuceno (Coinvalores CCVM Ltda)
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