Good morning! We’re covering Brazil’s hectic currency. Black Friday 2019: workers choosing gifts over paying debts. And Bolsonaro accused of “indigenous genocide.” (This newsletter is for platinum subscribers only. Become one now!)
Brazil’s currency drama set to continue
Wednesday market was yet another trading session with the Brazilian Real hitting a new nominal low. The Central Bank was forced to intervene twice, selling U.S. Dollars on the spot currency market. “If [today] we think there are dysfunctional moves, that Brazil’s exchange rate is behaving unlike other countries’ and there are liquidity gaps in the market, we will intervene again just like we did today,” said Central Bank President Roberto Campos Neto.
Expect even more volatility today, as markets will have less liquidity with the Thanksgiving holiday in the U.S.
Why it matters. A highly volatile currency is terrible for companies dealing with both imports and exports. It also diminishes Brazilians’ purchasing power, making products like fuels, bread, or pasta (based on products traded in USD) more expensive.
Red flags. The Central Bank went ten years without selling off U.S. Dollars on the spot market—but this year has already seen numerous such auctions. If the trend continues, it could reduce...