Brazil's central bank, BACEN, intervened on Friday to support the real, ING’s FX strategist Chris Turner notes.  

BACEN intervenes on Friday to support the real

“BACEN said the move was to offset pressure on the real due to the rebalancing of the MSCI equity index which takes place today.”

“Yet the real was also under pressure after Friday saw the July primary budget deficit come in three times higher than expected. The news comes at a bad time for the Brazilian government as it remains under pressure to deliver fiscal consolidation into 2025.”

“The market is now pricing a 25bp Brazil rate hike for 18 September – the day that the Fed is expected to cut. That may help stabilise the real, but we remain concerned that with high levels of floating rate date, Brazil's challenge to roll its debt at 12% per annum rates will keep the real on the back foot.”