FXStreet (Córdoba) – According to analysts from Rabobank Brazil is facing many important risks and the environment it likely to get worse before its gets better.
Key Quotes:
“Brazil is facing a trifecta of risks: 1) Slowing global growth and lower commodity prices; 2) Domestic macro issues and a slipping fiscal footing; 3) Political instability and calls for impeachment”
“We have revised our macro forecasts to show a greater contraction in economic growth this year and next, higher inflationary pressures and even higher unemployment.”
“As previously argued, resuming the tightening cycle looks tricky so an alternative is to delaying rates cuts and leave the SELIC high for longer. In terms of the currency, we do not think all the potential bad news is in the price and we do see things in Brazil getting worse before they get better. We are of the view that USD/BRL should be trading north of 4 and in the course of the next year we view any dip below that level as a better opportunity to buy USD/BRL (sell BRL).”
(Market News Provided by FXstreet)