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Sur”real”: Brazil’s Currency Stages Largest Rally In Seven Years On Central Bank “Whatever It Takes” Moment
zerohedge.com / by Tyler Durden / 09/25/2015 09:00
Over the past several weeks, we’ve said on a number of occasions that even we have been surprised at how quickly the situation in Brazil has deteriorated.
To be sure, there are plenty of things for Latin America’s most important economy to worry about, including twin deficits on the fiscal and current accounts, persistently low commodity prices, FX pass-through inflation, rising unemployment, plunging consumer confidence, and a seemingly intractable political crisis.
That said, recent movements in the BRL seem to be telegraphing something worse than a transient crisis. Here’s a bit of historical context:
Indeed, the pace at which Brazil’s flagging currency has weakened against the dollar over the past two weeks suggests the country may be headed for something like an outright economic cataclysm.
As it turns out, we aren’t alone in terms of being surprised at the scope of the rout. Here’s Bloomberg with some rather amusing color on the degree to which virtually everyone has been taken off guard:
As Brazilian markets went wild this week, trading desks fell silent.Unlike previous scares that rocked Latin America’s biggest economy — a 50-minute selloff triggered by a blackout, for example, or fear a corruption scandal is getting ever closer to the presidency — this time around there’s no shouting as clients call to demand updates or computer screens explode with instant messages. Instead, panic has given way to a shocked silence as traders watch markets unravel, according to interviews with half a dozen brokerages.
“There’s a saying that helps explain our mood around here,” said Guilherme Esquelbek, a currency trader at Correparti Corretora de Cambio in Curitiba, Brazil. “When the sea is this turbulent, the only thing you can do is sit on the sand and watch. It’s not time to get in a boat.”
The post Sur”real”: Brazil’s Currency Stages Largest Rally In Seven Years On Central Bank “Whatever It Takes” Moment appeared first on Silver For The People.
Source: http://silveristhenew.com/2015/09/25/surreal-brazils-currency-stages-largest-rally-in-seven-years-on-central-bank-whatever-it-takes-moment-2/
