Economists at Credit Suisse remain bearish BRL and set USD/BRL target at 6.20.
Key quotes
“We remain sceptical about BRL’s near-term prospects: the political risk picture remains highly volatile and the near-term outlook for monetary policy is likely to be tied to the performance of inflation indicators, which overall have surprisingly been weak.”
“On the political front, we see more potential for market-friendly surprises than in the data, even though our bias remains overall very cautious.”
“We set near-term USD/BRL target at 6.20, well above 3m forwards (currently ~5.91) but also well below the approximate 25d strike on a 3m USD/BRL call, currently around 6.45.”
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