HALISTER1: BRL Rally Opens Room For BCB to Trim Swaps Position: Analysts

BRL Rally Opens Room For BCB to Trim Swaps Position: Analysts

(Bloomberg) -- BCB outstanding position in swaps may drop to below $100b for 1st time since Oct. 2014 after today’s auctions; after recent BRL gains amid political developments, bank holds reverse swaps to curb currency volatility, analysts say.
  • Given the BRL strengthening trend, “there is room for BCB to trim its position in swaps,” Roberto Padovani, an economist at Banco Votorantim says
  • “The BCB is taking the chance to diminish a position that was criticized by everyone for a while,” Jankiel Santos, chief economist at Haitong says
    • BCB is unlikely intending to restrain gains; while reverse auctions may ease BRL gains, it’s not possible to impede further rises
    • “People are looking at Brazil with a better view as impeachment odds advance”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jankiel Santos (BES Securities do Brasil SA CCVM)
Roberto Padovani (Banco Votorantim SA)

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