Brazil’s Real Buoyed as Impeachment Odds Overshadow BCB, Says CA
(Bloomberg) -- BRL rising, DI rates extending drop show market is increasing bets that President Rousseff may be impeached, Vladimir Caramaschi, chief strategist at Credit Agricole Brasil, says in a phone interview.
- Brazil may receive stronger flows should Rousseff be replaced by a pro-reform government
- Local high rates, in a context of near-zero external rates, may reinforce inflow
- BCB, which pared volume in today’s swaps auction, could reduce offerings further in the case of an impeachment
- Even the possibility of BCB starting to repurchase the swaps can’t be ruled out because BRL could rise more if reforms are seen as more feasible in a new government
- Stronger inflow could lead BRL to keep advancing even if swap auctions shrink
- Even if Rousseff is impeached, other risks remains, Caramaschi says
- If Vice President Temer is caught up in the ever widening Carwash probe after succeeding as President, political crises may resume; there is also risk of the current ruling PT party promoting strikes and protests against a new government if it is part of the opposition
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HALISTER1Source: BFW (Bloomberg First Word)
People Vladimir Caramaschi (Credit Agricole Brasil SA DTVM/Brazil)
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