Daily outlook for BRL: Commerzbank

Quotes from Commerzbank Corporates & Markets:

-BRL: The Brazilian real should be under pressure in the next days as Petrobras (state controlled oil company) was downgraded by Moody's to junk territory (to Ba2 from Baa3) on Tuesday night after markets closed. The timing of the downgrade (evening) suggests that the BRL hasn't had time to reflect the move and thus weaker levels at the opening today should be expected.

-It's important to mention that given the size of Petrobras and the relationship with many sectors of the Brazilian economy, this event could have important consequences for macro indicators in the long run.

-With respect to the BRL, less FDI flows into the domestic oil sector and of course, a more adverse investment environment for local assets could prevent incoming capital flows into Brazil for both, long-term fixed investment and portfolio and thus not bode well for the real in the coming quarters.