Brazil Hedge Fund Switches to Currency Bets on Cautious Central Bank
- Genoa says real fair price closer to 4.5 per dollar than 5
- Rates to fall to 8.5% in 2024 year-end with 50bps pace
Brazil policymakers began lowering borrowing costs back in August, one of the first major central banks to embark on easing campaigns.
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Genoa Capital, a Brazilian hedge fund with $3.8 billion in assets under management, says it’s time to bet on the nation’s currency and stocks as the central bank’s cautious approach to interest rate cuts diminishes the appeal of local rates.
While the Brazilian real is one of the best performing major currencies this year, trailing only the Mexican peso, it’s fair price is “closer to 4.5 than 5 reais per dollar,” according to Igor Velecico, a partner and chief economist at Genoa. That’s about 6.8% stronger than the 4.83 per dollar the currency is trading at.