HALISTER1: BRL Weakened by Auctions; Political Factor Positive: Analysts

BRL Weakened by Auctions; Political Factor Positive: Analysts

(Bloomberg) -- Still partially under influence of yesterday’s BCB auctions, BRL is again feeling the impact of additional FX reverse swaps offerings today, impeding a BRL rally on the improving political outlook, analysts say.
  • Yday external scenario helped BRL, today EMFX is broadly declining, Juliano Ferreira, strategist at Icap says in a phone interview
    • Prospects of President Rousseff being ousted continue to show positive influence over currency market
  • “The trajectory for the real is positive. But what if the impeachment fails to pass next Sunday?” Alfredo Barbutti, economist at BGC Liquidez says
  • “These reverse swap auctions are intended to cap the real from strengthening excessively and I suspect they will continue to do so until political visibility improves,” Mike Moran, head of economic research for the Americas at Standard Chartered says
    • BCB strong action is evidence of a “continuing inflow,” Pablo Spyer, director at Mirae Asset Wealth Management says
    • Recent political developments positive for mkts
  • NOTE: BRL -1.55% at 3.5439/USD at 12:03pm local time; BCB auctioned 6,000 of 23,000 reverse FX swaps offered; earlier, bank sold 57,000 of 80,000 swaps offered; yday, BCB sold as much as 160,000 contracts, equivalent to $8b
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Juliano Ferreira (ICAP PLC)
Alfredo Barbutti (Liquidez Dtvm Ltda)
Mike Moran (Standard Chartered PLC)
Pablo Spyer (Mirae Asset Global Investments)

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