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Brazil's currency, the real, experienced significant swings after the central bank announced its second intervention in the currency market. The central bank auctioned up to 30,000 FX swaps, worth almost $1.5 billion, in an effort to offset concerns about the country's deteriorating fiscal outlook. The real initially opened higher but plummeted after a report on the fiscal deficit, making it the worst performing currency in emerging markets this year. Experts believe that the real will continue to underperform until the fiscal outlook improves. [Extracted from the article]

Brazil's real currency experienced a significant drop in value compared to other emerging market currencies due to worse-than-expected budget data, raising concerns about the country's fiscal outlook. The primary budget deficit for July was 21.3 billion reais ($3.8 billion), much higher than the estimated 6.9 billion-real shortfall. President Luiz Inacio Lula da Silva's spending policies and uncertainty about future interest rates have contributed to the real's poor performance this year. Experts believe that the real will continue to underperform until there is an improvement in the fiscal outlook. [Extracted from the article]

Brazilian assets experienced a rally after Finance Minister Fernando Haddad announced spending cuts aimed at meeting the country's fiscal goals. The announcement was well-received by investors, with swap rates falling and the Brazilian real strengthening. President Luiz Inacio Lula da Silva approved the plan and emphasized the need to comply with the country's fiscal framework. While the announcement provided temporary relief, markets still anticipate further action to ensure long-term fiscal sustainability. [Extracted from the article]

Brazilian markets experienced further losses due to concerns about President Luiz Inacio Lula da Silva's commitment to improving the country's fiscal accounts. Traders sold off the Brazilian real and increased interest rate swaps, indicating expectations of a central bank interest rate hike. The decline in the real was triggered by new data showing a larger-than-expected budget deficit in May, as well as a rebalancing of JPMorgan Chase & Co.'s bond index. Analysts are skeptical about Finance Minister Fernando Haddad's ability to eliminate the primary fiscal deficit, and Lula's criticism of the central bank has also unsettled investors. [Extracted from the article]

Brazilian markets experienced losses due to concerns about President Luiz Inacio Lula da Silva's commitment to improving the country's fiscal accounts. Traders sold off the Brazilian real and increased interest rate swaps, indicating expectations of a central bank interest rate hike. The market decline was triggered by new data showing a larger-than-expected budget deficit in May and a lower-than-forecast jobless rate. Analysts have become skeptical about Finance Minister Fernando Haddad's ability to eliminate the primary fiscal deficit, and Lula's criticism of the central bank has further unsettled investors. [Extracted from the article]

Brazil's swap rates market has experienced wild swings, with receiver positions suffering losses. Swap contracts maturing in January 2027 have seen significant jumps, indicating a rise in interest rates. The market's movements have been influenced by factors such as delayed rate cuts in the US, doubts about Brazil's fiscal framework, and concerns about the country's fiscal outlook. While some relief has been seen, there are still substantial losses, and investors are looking for clearer indications of a cutting-expenditure agenda. [Extracted from the article]

Mounting concerns about Brazil's fiscal deficit have caused significant fluctuations in the country's swap rates market. Swaps now indicate that the key interest rate will rise by 65 basis points to 11.15% by the end of the year, eliminating the possibility of further rate cuts. This shift is due to Brazil's rising inflation breakevens and doubts about the government's ability to meet its fiscal targets. While some economists believe that the central bank may be forced to raise rates, the likelihood of this happening remains low. [Extracted from the article]

Emerging-market investors are shifting their focus to local bonds and relative-value currency trades following election shocks that disrupted previous bets in major developing economies. Ashmore Plc and Ninety One are among the firms increasing their positions in local debt, particularly in frontier markets. Other investors are recommending currencies like the Polish zloty, which is seen as relatively insulated from political turbulence. Turkish assets are also becoming a favored bet due to the country's economic policy changes and investor-friendly officials. The search for new investment opportunities has intensified after recent election surprises, prompting investors to explore different trades and reduce exposure to emerging-market currencies. [Extracted from the article]

Emerging-market investors are shifting their focus to local bonds and relative-value currency trades following election shocks that disrupted previous bets in major emerging economies. Ashmore Plc and Ninety One are increasing their positions in local debt, particularly in frontier markets, while others are recommending currencies like the Polish zloty and Turkish assets. The search for new investment opportunities has intensified after recent election surprises, with some investors looking at Poland for its high carry and low political uncertainty. However, election uncertainty is not over, as investors also have to consider upcoming votes in the European Union, UK, and US. [Extracted from the article]

Mexican traders are seeking protection in currency options following the victory of the ruling party Morena. The implied volatility of the Mexican peso has reached its highest level since October, making it the currency with the highest implied volatility among 16 main currencies and the second highest among all 31 major currencies tracked by Bloomberg. Traders are eager to hedge against further depreciation in the peso, as it has experienced a 4% depreciation on Monday and is currently the worst performing currency globally. This is happening amidst a broader risk-off sentiment and reductions in positions by carry traders. [Extracted from the article]

Mexican traders are seeking protection in currency options due to concerns over the ruling party's victory in the recent election. This has led to a significant increase in implied peso volatility, with the one-month gauge reaching its highest level since October. The Mexican peso now has the highest implied volatility among major currencies, second only to the Russian ruble. Traders are eager to hedge against further depreciation in the currency, as the peso has experienced significant losses in recent days. [Extracted from the article]

Leveraged funds, including hedge funds, have played a significant role in the recent rally of the Mexican peso, making it the best performing currency in the world this year. These funds increased their net long peso positions, contributing to the peso's strengthening against the US dollar. Institutional asset managers also added to the positive momentum by increasing their long peso contracts. Factors such as a decline in global volatility and expectations of easing by the Federal Reserve have improved the peso's risk-reward ratio. The focus will now shift to local activity data, including GDP and inflation numbers, which will influence Mexico's monetary policy decisions. [Extracted from the article]

Traders in Brazil are hesitant to bet on rate cuts despite expectations that the central bank will continue to lower borrowing costs. A recent central bank statement, which revealed a split vote on the decision to lower the benchmark rate, created uncertainty and led to a reaction in the swap curve. Traders are cautious due to the upcoming change in leadership at the central bank and uncertainties in global monetary policy. Additionally, fiscal risks and inflation converging to target are factors contributing to skepticism about a higher terminal rate. [Extracted from the article]

The Chilean peso, which was the worst performing currency in the first quarter, is now experiencing a rally due to the rise in copper prices. Copper, which makes up over half of Chile's exports, has increased by 20% since February, while the peso has only gained 2.2%. The rally in copper is also benefiting the Peruvian sol. However, investing in Chile and Peru is considered risky due to the volatility of their currencies and reduced trading volumes. [Extracted from the article]

Institutional asset managers have significantly reduced their long positions on the Mexican peso, which was previously the best performing currency in emerging markets this year. The reduction in positions is due to increased global currency volatility, uncertainty over US monetary policy, and tensions in the Middle East. The Mexican peso's one-month implied volatility has risen, making it less attractive to hold long peso positions. The currency is currently the worst performing major currency in the world this month, and a breach of its 200-day moving average could lead to further depreciation. [Extracted from the article]

Foreign funds are increasingly betting against the Brazilian real, causing it to become the worst-performing major currency in the world. Negative local news and a reevaluation of global interest rate expectations have contributed to the real's 4.5% decline this month. Commodity trading advisers (CTAs), a specific type of hedge fund, have been identified as a key factor in the currency's downward trend. Concerns about tensions in the Middle East and the potential for the Federal Reserve to maintain higher interest rates have also impacted the real. Additionally, worries about Brazil's fiscal accounts and the government's focus on increasing revenues rather than cutting spending have further weakened the currency. [Extracted from the article]

Carry traders are selling off their positions in emerging markets due to increasing funding costs and geopolitical risks, and even the Mexican peso, which has been performing well, is being affected. The peso is among the worst-performing currencies, down 1.7% on Tuesday, as high-yield currencies are being abandoned in favor of the dollar. The recent spikes in volatility and the strength of the dollar are causing traders to reassess their positions. While the peso is expected to rebound in the long term, it is likely to continue to suffer until more positions are unwound. [Extracted from the article]

Hedge funds are increasing their bullish bets on the Mexican peso, making it the best-performing major currency in the world. Leveraged funds have significantly increased their holdings, reaching the highest level since March 2023. The peso's strength is attributed to the belief that diplomatic efforts will prevent the conflict between Iran and Israel from escalating, as well as its attractive carry-to-volatility ratio and hawkish central bank. The peso is the only major currency appreciating against the dollar this year, gaining almost 25% since the end of 2016. [Extracted from the article]

Brazil's easing cycle, which has been one of the earliest and steepest among major global central banks, may be coming to an end due to expectations of a more hawkish Federal Reserve and a rally in commodity prices. Traders are now predicting that Brazil will stop cutting interest rates in June, and the benchmark Selic rate may only be reduced by 7 basis points in August, compared to the previous expectation of a 15 basis point reduction. The central bank must consider the Fed's actions to avoid capital flight and also contend with concerns about lawmakers bypassing fiscal frameworks to accommodate extra spending. [Extracted from the article]

The expiration of a long-forgotten Brazil Treasury bond has prompted the country's central bank to intervene in the currency markets for the first time in nearly two years. The central bank is selling $1 billion in swaps to prevent a surge in volatility as these bonds come due on April 15. The bonds, which were sold in 1997 and never used again, will be wiped out from the market, leaving investors with a currency exposure that needs to be hedged. The central bank's currency position is already significant, and additional dollar sales may be necessary to maintain the value of the real. [Extracted from the article]

The Mexican peso has reached its highest value in almost nine years due to factors such as high interest rates, low volatility, and ample liquidity. Despite a recent interest rate cut, the central bank's caution about future cuts has kept the currency's carry trade above the historical average. The peso has been performing well even before the rate decision, and the use of the Japanese yen as a funding currency has contributed to its strength. Hedge funds and institutional investors have anticipated these gains, and a survey shows that the peso has the most favorable outlook among emerging-market currencies. Experts predict that the peso will continue to strengthen throughout the year. [Extracted from the article]

Funds and asset managers have increased their bullish bets on the Mexican peso, with leveraged funds holdings reaching their highest level in at least a year. This comes as the peso continues to perform well, defying claims that it is overvalued. The currency's strong performance is attributed to factors such as improved outlook for carry trade currencies and its attractive risk-reward ratio. The recent easing cycle in Mexico is not expected to change traders' bullish views, as the central bank has indicated a more moderate approach compared to other countries. [Extracted from the article]

The article discusses the volatility of the Chilean peso in the foreign exchange market. While currency swings have decreased globally, the peso's volatility remains high compared to other Latin American currencies. Traders attribute this to the central bank's unpredictable interest rate cuts, which have undermined the carry trade in the peso. The central bank has declined to comment on the issue. Despite the volatility, some experts believe that Chile's stable fiscal situation and shrinking current account deficit will eventually lead to a decrease in implied volatility. [Extracted from the article]

Chile is experiencing higher currency volatility compared to other countries in Latin America, despite a global decrease in currency swings. Traders are attributing this volatility to the central bank's inconsistent interest rate cuts, which have undermined the carry trade in the peso. The central bank's approach of changing the size of rate cuts at each meeting has prevented the peso's volatility from decreasing. While the market perceives the central bank as overly dovish, Chile's fundamentals remain stable, and as the market begins to appreciate this, volatility is expected to decrease. [Extracted from the article]

Brazilian markets experienced a decline after state oil company Petrobras announced a smaller-than-expected dividend payout, raising concerns about increased government intervention in major companies. The Brazilian real weakened and swap rates increased, while the benchmark Ibovespa equity index fell to its lowest point in over three weeks. Petrobras' shares also fell, erasing $11 billion in market value. Analysts from Bank of America and Banco Santander removed their buy-equivalent ratings for Petrobras, citing concerns about political risk. The dividend announcement is seen as a setback for Brazilian investors, who had been attracted to the country's relatively limited political noise. [Extracted from the article]

Brazilian markets are experiencing a decline following a smaller-than-expected dividend payout from state oil company Petrobras, which has raised concerns about increased government intervention in major companies. The Brazilian real has weakened, while swap rates have increased. The benchmark Ibovespa equity index has also fallen, largely due to Petrobras. Analysts from Bank of America and Banco Santander have removed their buy-equivalent ratings for Petrobras, citing concerns about political risk. The company's board approved a lower dividend payout for the fourth quarter, disappointing investors. The situation has caused setbacks for Brazilian investors who were attracted to the country's relatively limited political noise. Investors are also watching the CEO succession race at miner Vale SA for indications of government influence. [Extracted from the article]

Investors have become less optimistic about Brazilian assets following a lower-than-expected dividend payment by state-controlled oil producer Petrobras. This has raised concerns about political risk in Brazil. The Brazilian real has weakened, swap rates have increased, and the benchmark Ibovespa equity index has experienced significant losses. Analysts from Bank of America and Banco Santander have downgraded their ratings for Petrobras. This development is seen as a setback for Brazilian investors, who had been experiencing a period of relative political stability. [Extracted from the article]

The article discusses the current challenges faced by investors in emerging markets. Despite favorable conditions such as moderate foreign-exchange rate swings and high interest rates, carry trades in emerging markets are not yielding expected returns. This is due to uncertainty surrounding the timing of interest rate cuts by the Federal Reserve, which has caused volatility to decrease and investors to remain hesitant. As a result, local-currency emerging market bonds have experienced losses. The article suggests that once there is more clarity on the Fed's rate path, bets on emerging-market debt may become more successful. [Extracted from the article]

The inverse relationship between emerging-market currencies and their volatility has broken down, causing traders to be trapped in losing positions. This is due to a lack of currency rallies despite low volatility. The impasse is caused by uncertainty about when the Federal Reserve will cut interest rates, which has frozen investors and reduced volatility. Carry trades, where investors borrow in low-interest-rate environments to buy assets with higher returns, are also performing poorly. Emerging currencies and their implied volatility have historically had a negative correlation, but this trend has reversed. Investors are now switching to funding with Swiss franc and Japanese yen and investing in dollar assets. Some emerging economies have started cutting rates, putting pressure on their currencies. However, bets on emerging-market debt are expected to work better when the US rate path becomes clearer. [Extracted from the article]

The Brazilian real is experiencing its lowest volatility in a decade, leading to increased interest from local investors and potentially attracting foreign investors as well. The relative political stability and high interest rates in Brazil have contributed to this period of calm. Brazilian hedge funds have been increasing their holdings of the real, pushing them to a record high. While the real has declined 1.5% this year, it is still seen as an attractive option for carry traders due to its high real rates and lower political risk compared to other emerging markets. Bank of America strategists have recommended buying the real and selling the Mexican peso. The real is also expected to benefit from lower political noise compared to Mexico, which has upcoming presidential elections. Overall, the real is seen as a top pick in the region by BBVA. [Extracted from the article]

(Bloomberg) -- Latin American currencies are gaining favor as the past month's selloff entices investors less sensitive to wild volatility. The Mexican peso, the Brazilian real and the Colombian peso are becoming attractive again after being whipsawed in the last 30 days as traders reassessed the path of global interest rates, triggering a historic rout in US Treasuries that roiled emerging-market assets. The Chilean peso, one of the worst-performing emerging currencies in the past month, will likely remain under pressure due to its position as a heavy oil importer which relies on copper sales to China to get most of the its dollar inflows. [Extracted from the article]

(Bloomberg) -- Mexican peso traders are rushing to buy short-maturing currency options on view that wild swings are likely to continue over the next few weeks as bulls unwind positions after the currency breached its 200-moving average. The government's surprise move on airport concession agreements will likely push traders to wonder if other sectors may also be targeted, adding even more pressure on the currency. [Extracted from the article]

Read More: Oil Price Surge Upends Emerging-Market Disinflation Trade The Brazilian real's slump over the past seven sessions - 3.9% - is not even the biggest among developing nations. (Bloomberg) -- Emerging market currencies are on the brink of wiping out all the gains accumulated in 2023 as concerns about China's economy and US interest rates sour the mood with riskier assets. [Extracted from the article]

(Bloomberg) -- The Brazilian real is set for its longest losing streak in more than two years as concerns about China's economy and US interest rates sour the mood with riskier assets, putting emerging market currencies on the brink of erasing yearly gains. That puts the market in what investors call "backwardation", with spot prices higher than futures even though Brazil has higher rates than the US. [Extracted from the article]

It's also been hit after disappointing growth in China undermined copper prices and the central bank said it planned to rebuild its dollar reserves, buying up greenbacks. (Bloomberg) -- Chile's peso is racking up negative milestones - hitting a year-to-date low Tuesday, posting its longest losing streak in almost three years and becoming the only Latin American major currency to decline in 2023. [Extracted from the article]

Central bank chief Roberto Campos Neto and his colleagues are expected to lower the so-called Selic rate between 25 and 50 basis points basis points at their meeting next week, according to swaps traders. (Bloomberg) -- Central banks across Latin America are about to lead the world toward a wave of easier monetary policy. [Extracted from the article]

BBVA Mexico strategist Miguel Iturribarria wrote in a note to clients that the peso had further momentum and should remain strong in the coming months, though he expected its stretched valuation to eventually favor a depreciation. (Bloomberg) -- Mexico's peso is reaching high after high, with traders ignoring warnings that it has become sharply overvalued. [Extracted from the article]

The peso gained as much as 1.4% on Wednesday to its strongest level since 2015, rallying with global markets after US inflation data offered hope the US Federal Reserve would end its most aggressive interest-rate hikes in decades. Analysts Say Mexico's Peso Is Overvalued. Read more: Momentum Is Building for an August Rate Cut in Brazil The peso's real exchange rate recently hit its highest in nearly 15 years, according to one measure, and a chorus of analysts have said the currency has become overvalued amid the flows from investors who are seeking to milk the country's interest rate differential to developed market rates. [Extracted from the article]

While Chile's peso and Peru's sol may weaken as rate cuts are imminent, other currencies "can still reach new highs before interest rates start to come down", he added. (Bloomberg) -- The world-beating rally in Latin American currencies this year is about to come up against a world-leading round of interest rate cuts. [Extracted from the article]

"If Petro's reform agenda is unable to be implemented and Petro is essentially in a lame duck scenario, that combination takes a lot of political risk off the currency." (Bloomberg) -- It says something about the popularity of Colombia's government that a political scandal which threatens to undermine the president sends the currency to a 10-month high. [Extracted from the article]

Traders have rushed into the high-yielding receivers, a position that profits from falling interest rates, since mid-March - when traders began to see a potential halt in US rate hikes. (Bloomberg) -- Betting Latin American swap rate curves will shift lower has emerged as a hot new trade as local inflation cools and investors see the Federal Reserve pausing its monetary tightening cycle. [Extracted from the article]

The peso is down 5.9% since the banking crisis started on March 9, the worst performing among 23 major emerging-market currencies tracked by Bloomberg over that period. Global Banking Turmoil Threatens to Topple Mexico's "Super Peso" (Bloomberg) -- Just days after the Mexican currency hit a five-year high against the dollar, the era of the so-called super peso may have come to an abrupt end. [Extracted from the article]

Increase in volatility - which is now the highest in two years as the gamma provided by short-term options serves as a buffer against such wild swings - reduces the attractiveness of Mexico's carry trade, which has been one of the main factors driving its gains in 2023. (Bloomberg) -- The selloff in the Mexican peso following the extreme volatility seen in global yield markets amid the collapse of Silicon Valley Bank has sent traders rushing to seek protection. [Extracted from the article]

The anticipation of more inflation has caused swap rates and yields of local bonds to jump on expectations the central bank will need to keep its benchmark rate high for longer. Rapid inflation has been a major concern for the country in the past couple of years too, with runaway price gains prompting Brazil's central bank to raise interest rates throughout much of 2021 and 2022. [Extracted from the article]

CNN Brasil reported Wednesday that Senate President Rodrigo Pacheco signaled to Lula that he would agree to leave expenses related to a social aid program out of the spending cap rules for four years. (Bloomberg) -- Prospects for increased government spending and higher inflation under a Luiz Inacio Lula da Silva presidency are boosting the appeal of a combined Brazil trade: going short on the US dollar against the real, while betting on declines in local stocks. [Extracted from the article]

(Bloomberg) -- Brazil's currency and stocks sank and swap rates jumped as investors grew increasingly concerned that President-elect Luiz Inacio Lula da Silva's plans to boost spending will swell budget deficits and undermine fiscal accounts. The benchmark Ibovespa equity index dropped 3.3% and long-end swap rates rose more than 100 basis points. [Extracted from the article]

The real slumped as much as 3%, the benchmark Ibovespa equity index fell over 3.4% and long-end swap rates rose more than 100 basis points on Thursday. (Bloomberg) -- Brazil's currency and stocks sank and swap rates jumped as investors grew increasingly concerned that President-elect Luiz Inacio Lula da Silva's plans to boost spending will swell budget deficits and undermine fiscal accounts. [Extracted from the article]