Why the carry trade crowd is not bubbling the BRL or TRY?

Discussion in 'Forex' started by Daal, Jan 3, 2007.

  1. Daal


    Their paying huge interest, while I'm not sure of the turkish situation the brazilian situation is stable as inflation is coming down(hitting record lows), there is no threat of a default(nor necessity), trade surpluses and the stock market is hitting all-time highs(bovespa) which should attract foreign capital. I dont think the future of the country is bright(not with the current cast of jerks in the government) but as a speculation move it seems a no brainer. Central bank rate is at 13.25
  2. Because some of the thought (if I remember correctly) is that rates will be lowered shortly to deal with the currency rise.
  3. Daal


    yes, they are in a downtrend and the central bank can't raise it since the government is under pressure from exporters to weaken the real(foreign reserves are at record high of about $80b mostly due central bank intervention). the brazilian central bank is not independent, still they are huge at 13.25 percent. You add some leverage it plus the capital gain from USD(even on the usd bull year 05 the real was flat against it) it should make some good yearly returns