EM FX focused now on Brazil – Danske Bank

Senior Analyst at Danske Bank Jens Pedersen noted the recent price action in the Brazilian currency.

Key Quotes

“In emerging markets, we saw another explosion of idiosyncratic risk in an emerging economy as the Brazilian real fell to a 2.5-year low against the USD yesterday”.

“The USD/BRL climbed over 4.00 as the approaching presidential election has raised worries that market-friendly and reform-oriented candidates have low popularity among voters. Thus, the prospects for Brazil’s fiscal side have become gloomy”.

“In case of a further rise of the USD/BRL pair, we do not exclude a hike from the central bank in order to stop the FX run”.