The Brazilian Real is one of a string of currencies which is
rising against the USD on the heels of speculation that the Federal Reserve
Bank will cut US interest rates at its next meeting. If
the meeting conforms with market expectations, the Fed will cut the benchmark federal
funds rate by 50 basis points, to 4.75%. Such a move would further widen the gap between American and Brazilian
interest rates, which are currently among the highest in the world. The Brazilian Real has already climbed 10.5%
against the USD during 2007, a run which should continue if the Brazilian
economy further outperforms the US.
Bloomberg News reports:
“Markets pressing the Fed for a rate cut will remain the
story in global currency markets for a few more days,” said a local trader of Brazil’s
foreign debt. “A rate cut would allow investors in Brazil to focus on the
fundamentals, which point toward a stronger currency.”
Read More: Brazil’s Real Advances on Bets U.S. Will Cut Rates Next Week
Original post by Jimmy Atkinson and software by Elliott Back
Tags: No Tags