HALISTER1: BRL Tracks Global Risk Sentiment; Reforms Monitored: CA Indosuez

BRL Tracks Global Risk Sentiment; Reforms Monitored: CA Indosuez

(Bloomberg) -- Drop in Brazil’s currency and stocks reflect broad EMFX correction after recent gains; investors are monitoring key developments on reforms proposed by acting president Temer, Vladimir Caramaschi, chief-strategist at Credit Agricole Indosuez, says in a phone interview.
  • Reports Temer proposal to limit public spendings are suffering political pressures to be changed are relatively concerning
  • “The market expects the measure to be approved as soon as possible and with an amplitude as broad as possible”
    • While broader changes could risk impacting spending limits, slight ones could be acceptable, Caramaschi says
  • Investors are also watching the steps on FX policy taken by BCB, now under Ilan Goldfajn governance
    • “The new BCB board likely to be more orthodox than that led by Tombini. Goldfajn may show bigger tolerance over FX fluctuations”
    • Even being less interventionist than Tombini, Goldfajn probably will act in FX market; USD/BRL level where the intervention may occur is unclear, Caramaschi says
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Vladimir Caramaschi (Credit Agricole Brasil SA DTVM/Brazil)
Ilan Goldfajn (Banco Central do Brasil)
Michel Temer (Federative Republic of Brazil)

To de-activate this alert, click here

UUID: 7947283