7 Aug 2015
Sell any strength in BRL – BAML
FXStreet (Edinburgh) - Analysts at BAML reiterated its bearish stance on the Brazilian real for the time being.
Key Quotes
“We forecast GDP to contract 1.8% in 2015 and to grow 0.7% in 2016. Economic activity leading indicators – industrial production, retail sales and services – have been declining since the beginning of the year, following sluggish output performance, record low confidence levels, the tightened credit market and decrease in purchasing power given the high inflation”.
“As a result, we expect a more recessive scenario in 2Q compared to 1Q”.
“Short BRL positions continue to make sense on a fundamental basis. Accordingly, we revise our BRL forecast to 3.50 (from 3.30) and 3.80 (from 3.60) for year-end 2015 and 2016, respectively, given the recent BRL depreciation following government’s primary fiscal target revisions and the increase in chances of a downgrade by rating agencies”.
Key Quotes
“We forecast GDP to contract 1.8% in 2015 and to grow 0.7% in 2016. Economic activity leading indicators – industrial production, retail sales and services – have been declining since the beginning of the year, following sluggish output performance, record low confidence levels, the tightened credit market and decrease in purchasing power given the high inflation”.
“As a result, we expect a more recessive scenario in 2Q compared to 1Q”.
“Short BRL positions continue to make sense on a fundamental basis. Accordingly, we revise our BRL forecast to 3.50 (from 3.30) and 3.80 (from 3.60) for year-end 2015 and 2016, respectively, given the recent BRL depreciation following government’s primary fiscal target revisions and the increase in chances of a downgrade by rating agencies”.