HALISTER1: BCB May Act More Aggressively If BRL Keeps Plunging, CA Says

BCB May Act More Aggressively If BRL Keeps Plunging, CA Says

(Bloomberg) -- “The BCB rhetoric is all about curbing volatility,” Vladimir Caramaschi, chief strategist at CA Indosuez, says in a phone interview.
  • “Remember that BCB discourse about the size of its FX reserves? This could be a good moment to reduce it”
    • “BCB has a lot of ammunition”
    • High volatility diminishes the odds that BCB will boost the pace of rate cuts to 50bps from 25bps
    • Liquidity may be reduced today amid U.S. Veterans Day holiday, potentially helping boost volatility
    • Brazil’s deficit makes the country vulnerable to external financial conditions after the market is done reacting to the initial news of Donald Trump’s election as U.S. president
    • U.S. yield curve pressured by Trump fiscal plans
  • NOTE: BRL drops a 3rd day following EMFX rout even after BCB announced FX swaps rollover auction for today
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Vladimir Caramaschi (Credit Agricole Brasil SA DTVM/Brazil)

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