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BRAZIL: USDBRL Rises 1.2% After Lula Comments On Income Tax Exemptions

BRAZIL
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  • Local assets are underperforming again on Friday after President Lula said on local radio that the government wants income tax exemptions for salaries up to BRL 5,000 and even bigger exemptions in the future. DI swap rates have risen by more than 10bp around the 2Y segment, while USDBRL has risen by 1.2% to 5.65.
  • To recap, Finance Minister Haddad said yesterday that income tax reform will be neutral from a fiscal point of view, with extra revenue used to offset exemptions, and that the government is in no rush on the reform.
  • The gain in USDBRL has taken the pair above initial resistance at 5.5971, the Sep 23 high, with attention on resistance at 5.6917 next, the Aug 30 high and a bull trigger.
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  • Local assets are underperforming again on Friday after President Lula said on local radio that the government wants income tax exemptions for salaries up to BRL 5,000 and even bigger exemptions in the future. DI swap rates have risen by more than 10bp around the 2Y segment, while USDBRL has risen by 1.2% to 5.65.
  • To recap, Finance Minister Haddad said yesterday that income tax reform will be neutral from a fiscal point of view, with extra revenue used to offset exemptions, and that the government is in no rush on the reform.
  • The gain in USDBRL has taken the pair above initial resistance at 5.5971, the Sep 23 high, with attention on resistance at 5.6917 next, the Aug 30 high and a bull trigger.