BRL: Guided by the BCB intervention – Deutsche Bank

Deutsche Bank analysts point out that the Brazilian Real depreciated -0.17% to its weakest-ever level against the dollar yesterday, in spite of intervention from the central bank.

Key Quotes

“The move came after Brazil’s Economy Minister commented that a weaker currency is not a problem. Meanwhile, The Brazilian central bank has embarked on a series of rate cuts recently, with 50bp reductions at each of the last 3 meetings.”

“Added to this has been general concerns over political stability in Latin America in light of recent protests across the continent, while former President Lula’s release from prison has raised the prospects of a more radical, populist left-wing government further down the line as he re-enters the political fray.”

“Overnight, Brazil’s central bank chief Roberto Campos Neto has said that the central bank will intervene further if they need to normalize the foreign exchange market.”