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BRAZIL: Central Bank Intervention to Remain in Focus in 2025

BRAZIL
BulletEM BulletEmerging Market News
  • Brazil markets are closed today for a holiday, following the volatile session on Monday. The final BCB Focus survey of the year continued to show a deterioration of the inflation outlook, with economists now expecting IPCA inflation to reach 4.96% at the end of 2025.
  • Evidence of longer-term expectations remaining deanchored weighed on the Brazilian real and efforts to thwart the rapid depreciation continued, with the central bank auctioning a further $1.8billion in the spot market. The BCB has now intervened by selling just under US$22 billion in spot and US$11 billion in FX repo lines, comfortably marking the largest intervention in a single month since the pandemic in 2020.
  • Despite this action and the hawkish rhetoric from the Copom in recent weeks, USDBRL is up an impressive 27% on the year as heightened fiscal concerns persist, continuing to erode investor sentiment. Domestic focus turns to December IPCA inflation readings, scheduled on January 10.
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  • Brazil markets are closed today for a holiday, following the volatile session on Monday. The final BCB Focus survey of the year continued to show a deterioration of the inflation outlook, with economists now expecting IPCA inflation to reach 4.96% at the end of 2025.
  • Evidence of longer-term expectations remaining deanchored weighed on the Brazilian real and efforts to thwart the rapid depreciation continued, with the central bank auctioning a further $1.8billion in the spot market. The BCB has now intervened by selling just under US$22 billion in spot and US$11 billion in FX repo lines, comfortably marking the largest intervention in a single month since the pandemic in 2020.
  • Despite this action and the hawkish rhetoric from the Copom in recent weeks, USDBRL is up an impressive 27% on the year as heightened fiscal concerns persist, continuing to erode investor sentiment. Domestic focus turns to December IPCA inflation readings, scheduled on January 10.