LatinNews Regional Monitor: Brazil & Southern Cone - 21 February 2020

* The US dollar has reached a new high against the Brazilian real, closing the day at R$3.39/US$1 after having pushed R$3.40/US$1 during trading yesterday (20 February). This is the US dollar’s third consecutive record high against the real, with the Brazilian currency having depreciated 9% against the US dollar since the start of the year. This is largely due to the international scenario, notably the effects on the economy of the coronavirus (Covid-19) outbreak in China, although domestic factors such as continued uncertainty over Brazil’s economic outlook and a historically low benchmark interest rate (the Selic, currently set at 4.25%) are believed to be contributing factors. The rapid depreciation of the real led the Brazilian central bank (BCB) to intervene last week, selling currency swap contracts, a move which contained the fall of the real for a short time only.

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