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Pandemic Deterioration Highlights Persistent Economic Headwinds

BRAZIL

The severity of the Covid situation in Brazil was highlighted over the weekend. The coronavirus death toll rose by a record 3,650 on Friday, 3,438 on Saturday and 1,656 on Sunday. Nurses continue to warn they are "near their limit" when it comes to managing rising hospital admissions.

  • The Real weakened almost 5% last week as USDBRL soared to close above 5.75, eliminating the entire relief rally in the local currency following the surprise 75bps rate hike.
  • The spiralling pandemic, patchy vaccination rollout, persistent fiscal uncertainties and increased interference in state-owned firms all continue to pose large risks for the economy and local assets going forward.

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