Stars Align for Brazil’s Real to Outshine Mexican Peso in 2021
Bloomberg 12/22/2020 George Lei and Justin Villamil
(Bloomberg) The Mexican currency has outperformed its Brazilian counterpart for four straight years. That dynamic may finally be about to change.
Booming commodities, rock-bottom valuations and a hawkish turn at central bank are all poised to support the Brazilian real. But it’s politicians who hold the key to turning that into a long-term rally.
“Rates moving in different directions might not be enough by itself,” said Brendan McKenna, an foreign-exchange strategist at Wells Fargo in New York. “Brazil needs to shore up its fiscal position and make progress on the reform agenda for the real to gather longer-term momentum.”