Brazil real bucks the trend again

The real continues to ignore the global backdrop and is following domestic developments that continue to dominate on the positive side.

Fiscal results (primary budget balance for May) was slightly better than market consensus had forecasted suggesting an early stage of an stabilization from a fiscal perspective that stills needs to be cemented. 

The central bank is slowly reducing the roll-over of existing USD hedge provided in the FX swaps program by approximately 30% of the maturing amounts due in July.

In spite of the lower availability of FX hedge the real has managed to appreciate suggesting that high ex-ante interest rates continue to attract flows into Brazil.