Economics
Brazil Quenches Dollar Thirst But Traders Want More Rate Hikes
- Currency interventions are less important than rates outlook
- Dovish tone in Wednesday’s rate decision would weigh on real
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Brazil’s central bank is spending billions of dollars to curb the real’s recent losses, but for traders nothing would be more effective than a hawkish nod from the monetary authority.
An aggressive approach toward inflation is key for the Brazilian currency to reverse a two-week slump that $2.1 billion in spot and swaps intervention since April 22 has failed to revert. Despite the recent declines, the real remains the world’s best performing currency this year.