BRL May Test 3.00/USD Amid Local, Global Environment: Mirae
(Bloomberg) -- Positive developments in local scenario, along with global optimism, may reinforce BRL strengthening trend, Olavo Souza, fixed income head at Mirae Corretora, says in a phone interview.
- Although the impeachment is priced in, if Dilma is defeated by a wide margin it will show that Congress is on Temer’s side, which would be a positive sign for approval of reforms
- “Votes in Congress may be a game changer to show how the government will conduct the fiscal reforms”
- Market also monitoring Lower House vote on measure to cap budget spendings on states
- Investors expect cap to be approved with small changes compared to the original government plan
- With “no negative surprise,” BRL may soon test the 3.00/USD level or even stronger levels, Souza says
- Stronger BRL could positively impact inflation expectations and rates levels
- Global scenario and carry trade favored by local high rates also supportive for BRL
- U.S. economy is doing well and investors project Fed rates hike for as far out as 2017, despite some participants seeing earlier hikes
- NOTE: Impeachment in Focus as Brazil Senate Breaks From Olympics
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Dilma Rousseff (Federative Republic of Brazil)
Michel Temer (Federative Republic of Brazil)
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