Having started the session well,...>

EMERGING MARKETS: Having started the session well, BRL has now completely

reversed course, with USD/BRL now bumping into new daily highs to narrow the gap

with Friday's record levels at 5.7475.

- The Brazilian central bank have so far today intervened via both FX swaps and

spot USD auctions in what may likely be another day of heavy CB intervention. On

Friday, the BCB only managed to pressure USD/BRL lower by selling $1bln in spot

USD across a few operations ahead of the close.

- Moves follow the political crisis in Rio, which remains fraught after the

Justice Minister's resignation last week, which - in the extreme - could lead to

impeachment and criminal investigation into the President.

- Analysts have flagged the next risk as being the potential resignation of the

finance minister Guedes - which would mark a further blow to Bolsonaro's reform

promises that had been at the core of his presidential campaign and term so far.

The risk of this appears to have moderated slightly this weekend after the

President expressed his support for the FinMin publicly, followed by Guedes

himself stating the government's economic plans are unchanged.