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BRL Sinks ~4%, DI Swap Rates Rise Over 100 Basis Points

BRAZIL
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  • USDBRL continues its steep ascent on Thursday in the face of broad greenback weakness, rising just under 4% and briefly eclipsing the post-election highs above 5.40. Furthermore, there has been severe pressure on swap rates with most of the DI curve rising by over 100 basis points amid renewed anxieties relating to the nation’s fiscal trajectory. Assets were given an additional headwind as the latest IPCA inflation data rose above surveyed estimates, prompting the gap lower at the open.
  • Key short-term resistance for USDBRL has been defined at 5.4286, the Sep 29 high. While price trades below this level, the outlook remains bearish and a resumption of weakness would open the 5.0205 low on Nov 4. However, a break of this resistance would be a bullish development and place the next focus on 5.5142.
  • Brazil Swap Rates
    • Jan '23 +4.8 bps at 13.716
    • Jan '26 +111 bps at 12.99%
    • Jan '31 +95 bps at 13.03%

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  • USDBRL continues its steep ascent on Thursday in the face of broad greenback weakness, rising just under 4% and briefly eclipsing the post-election highs above 5.40. Furthermore, there has been severe pressure on swap rates with most of the DI curve rising by over 100 basis points amid renewed anxieties relating to the nation’s fiscal trajectory. Assets were given an additional headwind as the latest IPCA inflation data rose above surveyed estimates, prompting the gap lower at the open.
  • Key short-term resistance for USDBRL has been defined at 5.4286, the Sep 29 high. While price trades below this level, the outlook remains bearish and a resumption of weakness would open the 5.0205 low on Nov 4. However, a break of this resistance would be a bullish development and place the next focus on 5.5142.
  • Brazil Swap Rates
    • Jan '23 +4.8 bps at 13.716
    • Jan '26 +111 bps at 12.99%
    • Jan '31 +95 bps at 13.03%