BRL May Extend Gains Amid Reforms, Commodity Rally: Analysts
(Bloomberg) -- BRLs recent gains reflect improvement in country’s fundamentals, along with rally in commodities driven by Chinese demand, analysts say.
- Strengthening follow 5Y CDS drop from ~500 points to ~200 points in past year as Temer government makes progress on reforms and as BCB succeeds on fighting inflation, Nathan Blanche, economist and partner at Tendencias Consultoria, says in phone interview
- While Brazil growth is still fragile and assets gains are mostly the result of expectations, BRL may keep rallying and breach 3.00 as reforms attract more investment
- Unless “external noise” stalls rally, Brazilian assets are likely to continue advancing, says Leonardo Monoli, parter at Jive Asset
- “The market will begin to realize that asset prices still underestimate the recovery potential for the economy”
- Trend for the USD/BRL is to reach 3.00 as the external conditions are maintained, with strong demand for carry amid positive expectations for global growth, commodities price increases and relatively low volatility, says Gustavo Rangel, economist at ING
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Gustavo Rangel (ING Groep NV)
Leonardo Monoli (Jive Asset Gestao de Recursos Ltda)
Michel Temer (Federative Republic of Brazil)
Nathan Blanche (Tendencias Consultoria Integra)
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