Brazil's fiscal initiatives gain ground in congress

After several days of weak performance the Brazilian real recovered 0.44% against the USD on Wednesday to USD-BRL 3.1397 as the government's fiscal initiatives continue to gain traction in congress. Key austerity measures have been approved in the last two days that deal with curtailing unemployment benefits and limiting pensions. 

While these victories with no doubt are clear wins for president Rousseff there are bills still pending approval in congress that deal with implementing higher taxes to payrolls and some corporate taxes. These "revenue" side initiatives are also likely to face fierce opposition from opposition parties and even from within PT (President's party) but Comerzbank believes that President Rousseff still has enough political assets to move these bills through congress and ultimately sign them into laws. In light of this, the BRL could benefit from these tailwinds in the next days as the fiscal outlook on the expenditures and revenues side of the equation improves.