10 Mar 2015
Political jitters weigh on the BRL – Scotiabank
FXStreet (Edinburgh) - The effervescence in the Brazilian political arena plus the ongoing scandal surrounding oil giant Petrobras continue to hurt the confidence in the Brazilian currency, noted Eduardo Suarez, Chief FX Strategist at Scotiabank.
Key Quotes
“Local newspaper Valor Economico reported that President Rousseff’s is considering a reshuffle of her 3 month old government, in order to strengthen her position in the political crisis it is faced with”.
“According to Valor, the president could adjust her cabinet to include members of the PMDB party, in order to secure her support from the group in the legislative, given the party controls almost as much votes as the PT, and is crucial for the coalition’s majority”.
“From a market perspective, we believe that the political crisis (and the related Petrobras scandal) is among the major drivers of Brazil’s recent underperformance, which has led the country’s CDS to widen to a 150bps spread relative to Mexico’s, vs. a relatively consistent 80bs spread up to December 2014”.
Key Quotes
“Local newspaper Valor Economico reported that President Rousseff’s is considering a reshuffle of her 3 month old government, in order to strengthen her position in the political crisis it is faced with”.
“According to Valor, the president could adjust her cabinet to include members of the PMDB party, in order to secure her support from the group in the legislative, given the party controls almost as much votes as the PT, and is crucial for the coalition’s majority”.
“From a market perspective, we believe that the political crisis (and the related Petrobras scandal) is among the major drivers of Brazil’s recent underperformance, which has led the country’s CDS to widen to a 150bps spread relative to Mexico’s, vs. a relatively consistent 80bs spread up to December 2014”.