Brazil's Real Rates to Stay Restrictive, Capping FX Impact: Commerzbank
Markets expect a 25 bps cut from the Brazilian Central Bank, but real rates will remain highly restrictive, limiting the impact on the Brazilian Real, according to Commerzbank’s Norman Liebke.
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Markets anticipate the Brazilian Central Bank (BCB) will lower its benchmark interest rate by another 25 basis points. However, Commerzbank’s Norman Liebke notes that real interest rates will stay significantly restrictive, near levels that continue to provide yield support for the Brazilian Real.
The limited scope of policy easing is expected to cap the negative fallout for the currency. With real rates remaining elevated, the FX impact is contained, and the Real is not seen coming under pronounced depreciation pressure.
Source: FXStreet Forex News