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BRAZIL: Commerzbank Note Factors Pointing to Weaker Peso

BRAZIL
  • Despite the peso stabilising somewhat and USDMXN backing off its interim highs, Commerzbank do not expect this to last, forecasting higher levels by the middle of next year. Commerz note four factors that point to a weaker peso for the time being.
  • These are focused on domestic political risks, Banxico’s adjusted concerns with depressed growth, the possibility of a Trump election win and uncertainties for both major central bank policy & the global economic outlook.
  • These factors should provide hard times ahead for the peso and Commerz do not foresee a turnaround of this trend until the second half of 2025. At that point, Banxico should leave its interest rates unchanged and growth should pick up as a result of the rate cuts.

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