Halister News

(Bloomberg) -- Investors have shown a view on prospects of impeachment similar to those observed before the 2014 elections when BRL would drop as polls favored Rousseff and rise when the opposition gained, Rodrigo Borges, head of fixed income at Franklin Templeton Invest Brasil says in a phone interview.

• NOTE: BRL dropped more than 4% over the past two days on concerns Rousseff govt may survive impeachment if former pres. Lula assumes a cabinet post; until last Friday, BRL posted biggest gains among EMFX on rising prospects Rousseff could be replaced by a more pro-reforms government
  • BRL 1-month volatility is nearing highest in 3 months
  • “It is difficult for the market to analyze politics,” even more so in the current scenario, Borges says
  • Mkt was influenced by prospect of a more market-friendly govt emerging in case Rousseff exits; now, should Lula join Rousseff, there might be policy changes
• While in short-term the uncertainties are high, Brazil may offer long-term opportunities given relatively low asset prices, Borges says
• There’s a view that, given allegations weighing on Lula and the poor economy, the ruling party PT has little hope to keep power in 2018 elections, opening room for a more pro- mkt govt
• NOTE: BRL volatile on Veja report on Senator Amaral’s plea bargain and a Globo report saying Lula is said planning to accept post as minister