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BRL Strengthens Against USD as Equities Surge to New All Time High

BRAZIL
  • Ibovespa broke above its 125,300 resistance this week and currently trade slightly below the 130,000 level.
  • USDBRL has been trending sharply lower in the past two weeks, down over 5% and gradually approaching its ST support at 5, which represents the 50% retracement of the 4 - 6 range (2019/2021 low high range).
  • While most of the EM currencies have been strengthening against the US Dollar in the past 15 months, we saw that the BRL has remained weak amid rising economic and political uncertainty, pushing CBB policymakers to start a hiking cycle to curb the inflationary pressures (CBB raised rates by 150bps in 2021).

Source: Bloomberg/MNI

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