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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 396.31-0.6%Dec 31 4:00 PM EST
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To: THE ANT who wrote (29653)2/28/2008 10:03:10 AM
From: elmatador  Read Replies (1) of 218881
 
Exchange rate may prompt CB change second half. Banks already informally working with USD between 1.50 and 1.55 at end of first semester.
Last 8 days USDS lost 4.62%. There will be some pauses ion the way but without invalidating the main low tendency.

At R$ 1,50, USD will force CB to review monetary policy. Could not keep SELIC on 11,25% until year end as COPOM wanted.

Econometric models estimate IPCA below 4% for 08 and 09. There won't be an "heterodox" drop in interest rates to dissuade incoming speculative capital which is increasing due to interest rate delta.
It will be return to flexibilization cycle due to the inflation pull back.

CB getting good argumentation against the idea the it is simply a matter of dropping SELIC to revert USD fall. The argument is: USD is dropping hard in countries that do not pay high interest rates.

Of all currencies appreciating against USD Brazil is just the fifth. rand rican rand (1,89%), NOK (1,61%), CAD(1,58%) e o CHF (1,47%). Note that big investors are running away from USD due to FED lenient monetary policy.

Weakening of USD was reinforced by Bernanke’s speech. Even though there are inflationary pressures in the US they won’t be fought at this juncture. Resulting from this speech expectancy for .5 cut

Selic keeping 11,25% will jack up delta from 8% to 8,54%. That's the yearly gain in arbitraging. Since JAN 21 until FEB 27 USD fell more than the delta: 8,63%.

economia.uol.com.br
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