In this “Deeper Dive”, Dan Wales, Director, Economic Research, joins Gavyn Davies, Founder and Executive Chairman and Andy Bevan, Partner and Economic Advisor, to discuss the following:
- Brazil has experienced recent volatility in its markets, including a weaker currency
- The overall economic backdrop, including growth, inflation, and unemployment, is relatively stable
- Worries about fiscal stability have fed concerns
- The market is also concerned about the inflation credibility of the central bank
- Forwards now price a high level of real interest rates compared with the past
- The currency is undervalued relative to longer-term fundamentals
- The Fed’s easing cycle could be supportive for emerging markets, including Brazil
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