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25 Apr 2016
Brazil: Now what? – Commerzbank
Analyst, Peter Kinsella at Commerzbank, suggests that the last week’s vote in Brazil’s lower house of Congress starts the impeachment process in earnest.
Key Quotes
“Investors can expect a Temer led administration by early May. In our view BRL exchange rates have largely priced in a benign outcome and we therefore think it is prudent to exit long BRL positions at current levels. Indeed, BCB’s change of stance with its intervention policy implies that the central bank favours weaker BRL exchange rates.
The immediate timeline
• The vote will now pass to the Senate for approval. It is unlikely that President Rousseff will be able to garner enough support to prevent the vote passing.
• Once passed, Presidential powers will move to the current Vice President Michel Temer. Investors can expect a Temer led administration by mid-May.
• President Rousseff will step aside for 180 days. If found guilty / actually impeached Temer will assume Presidential powers until the expiration of Rousseff’s current term, which will last until 2018.”
Key Quotes
“Investors can expect a Temer led administration by early May. In our view BRL exchange rates have largely priced in a benign outcome and we therefore think it is prudent to exit long BRL positions at current levels. Indeed, BCB’s change of stance with its intervention policy implies that the central bank favours weaker BRL exchange rates.
The immediate timeline
• The vote will now pass to the Senate for approval. It is unlikely that President Rousseff will be able to garner enough support to prevent the vote passing.
• Once passed, Presidential powers will move to the current Vice President Michel Temer. Investors can expect a Temer led administration by mid-May.
• President Rousseff will step aside for 180 days. If found guilty / actually impeached Temer will assume Presidential powers until the expiration of Rousseff’s current term, which will last until 2018.”