BRL: Limited Fallout From Credit Crunch

September 2007 | Economic Analysis

After trading at a seven year high of BRL1.8338/US$ in July, the real sold off in recent weeks on the back of a rise in global volatility, stemming from concerns over the health of US subprime mortgages. The unit is currently trading at BRL1.9725/US$, and we expect it to remain relatively weak in the short-term as risk appetite for emerging markets has waned somewhat. Having said that, we remain bullish the real over the medium term as the country's economic fundamentals continue to improve.

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