Brazil Reforms Implementation, FX Policy Are Key: Analysts
(Bloomberg) -- Next drivers for Brazil assets will be the ability of Michel Temer’s government to implement pledged reforms, along with the pace of central bank’s FX action, analysts say.
- Assets may gain more should govt reshape the pension regime, and keep Congress from making significant changes to the planned reform, Rodrigo Melo, chief economist at Icatu Vanguarda Administracao de Recursos, says in a phone interview
- While Itaú’s Goldfajn nomination for BCB is mostly priced in markets, its confirmation could lead for increasing bets on Selic cuts; ’’Ilan might be more aggressive on rate cuts’’
- Despite the fact that Goldfajn is well respected in the market, it’s unclear whether BRL gains will speed up, Italo Abucater, head of currency trading at Icap do Brasil Ctvm
- Even with new staff, BCB could halt FX strengthening by selling more FX reverse swaps, Abucater says
- Along with reforms implementation, China growth also important driver for BRL
- NOTE: Finance Minister Meirelles may announce tomorrow the name of BCB president; minister hasn’t yet released all the names of his team
- NOTE: Acting President Temer yday said he will only gain popular recognition if he produces tangible results for the population, while pledging not to run for the country’s top job in the 2018 election
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Michel Temer (Federative Republic of Brazil)
Rodrigo Melo (Icatu Vanguarda Administracao de Recursos Ltda)
Ilan Goldfajn (Itau Unibanco SA)
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