Real strength set to continue

- By FX Markets Staff
- @FXMarkets_
- 16 Oct 2006

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Brazil is far from finished cutting interest rates, and combined with its poor record in delivering growth, this raises questions regarding the direction the real (BRL) will take in the coming months. We believe that the BRL will remain supported in the months ahead. We base this assessment on two factors.

First, while it is true that the nominal rate has come down dramatically, the real interest rate has come down much more slowly as inflation (and inflation expectations) in Brazil has collapsed

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