HALISTER1: BCB Unlikely to Change BRL Trend With Swaps, BGC Liquidez Says

BCB Unlikely to Change BRL Trend With Swaps, BGC Liquidez Says

(Bloomberg) -- BRL may resume gains if uncertainties that led to the currency’s decline in recent years continue easing, Alfredo Barbutti, economist at BGC Liquidez Dtvm says in a phone interview.
  • Just as the BCB’s selling of regular swaps failed to stop BRL weakening in recent years, auctions of reverse swaps now probably won’t halt BRL strengthening
    • Improving current account, U.S. Fed signaling more gradual hikes positive for BRL
    • Mkt perception puts the new level for USD/BRL “way below” 4.00
    • BCB sees BRL stronger levels as an “opportunity window” to ease its exposure to FX swaps, Barbutti says
  • NOTE: BRL rises after early drop as BCB last Friday announced auction of FX reverse swaps, which is equivalent to central bank buying about $1b
    • It is first reverse swaps offering in 3 years, period when BCB sold regular swaps to stem BRL weakening trend
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Alfredo Barbutti (Liquidez Dtvm Ltda)

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