HALISTER1: BCB May Keep Intervening to Avoid Further Real Gains: Mizuho

BCB May Keep Intervening to Avoid Further Real Gains: Mizuho

(Bloomberg) -- Should Brazil central bank fail to act, BRL will keep advancing amid positive external and local environment, Luciano Rostagno, chief strategist at Banco Mizuho do Brasil, says in a phone interview.
  • Preventing further BRL gains would be important to maintain stimulus for exporters
  • Mkt optimism fueled by reports saying former BCB head Meirelles may become FinMin if VP Temer replaces President Rousseff; impeachment vote in Senate is expected between May 6-11
    • Reports show Temer would seek a fiscal adjustment based on spending cuts rather than tax increases, which could be positive for economy, Rostagno says
  • “The government change itself would be positive. The country was headed for an abyss”
    • Main remaining question is the pace of the adjustments to be held by the new government, and if it will be sufficient to gain the investors confidence
    • BRL also buoyed by external scenario given prospects of gradualist Fed and improving data in Europe, Rostagno says
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Luciano Rostagno (Banco Mizuho do Brasil SA)
Henrique Meirelles (J&F Investimentos SA)
Michel Temer (Federative Republic of Brazil)

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