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FX Swap Auction Signals Officials Unhappy With BRL Level

BRAZIL

Brazil confirmed it sold all 20,000 FX swaps offered:

  • 7,600 contracts due June 2021
  • 12,400 contracts due Dec. 2021

USDBRL traded down from 5.81 to 5.77 on the announcement but stabilised thereafter. The decision to call the fx swap auction at such an early point in the session strengthens the view that officials are uncomfortable with current FX level.

  • USDBRL extending lower post US CPI, as U.S Tsy futures bounce.

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