Brazil’s BCB May Suspend Swap Auctions Amid BRL Slide: Analysts
(Bloomberg) -- BCB may completely suspend FX reverse swaps auctions should BRL maintain the current trend of underperforming most EMFX with high volatility, analysts say.
- Brazil’s central bank yesterday should have suspended the auctions instead of only cutting the volume, Vladimir Caramaschi, chief strategist at Credit Agricole Indosuez, says in a phone interview.
- “BCB can’t add fuel to the fire. Should today’s move continue, it may suspend the auctions”
- BRL is down today despite BCB having cut to 5,000 from 10,000 the amount of FX reverse swaps in today’s auction
- Central bank may totally halt the swap auctions should the “bad mood” continue, Rabobank’s Mauricio Oreng yesterday said
- BCB pattern is to “lean against the wind”
- Decision of cutting the volume is correct as BCB doesn’t want to add pressure with BRL: Goldman Sachs’ Alberto Ramos
- BRL drop reflects concerns about U.S. rates and local political uncertainties, CA’s Caramaschi says
- “The expectations on Fed rates will be dissipated only after next Wednesday’s meeting”
- BZ suffering more than peers now given “high beta” and also from prior gains that outpaced the EM
- Correction may be limited as Fed is unlikely to significantly tighten, even in case of a hike next week
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Vladimir Caramaschi (Credit Agricole Brasil SA DTVM/Brazil)
Alberto Ramos (Goldman Sachs Group Inc/The)
Mauricio Oreng (Banco Rabobank International Brasil SA)
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