Scoring Latin America: Cautious Optimism

  • Wednesday, November 11, 2015

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While quieter than it was in September, the Latin American story line is still dominated by Brazil–the largest economy in the region.

Brazil–like much of the globe–is stuck in a cycle of tentative growth and occasional optimism. The real has rebounded–slightly–from its September numbers, but the currency remains near multi-year lows. Our Brazilian central bank sentiment (BCB Index) has captured this attitude perfectly. Oscillating between the borders of neutrality, the BCB Index’s current average is a moderately dovish -0.5:

bra_2015-11-11

The big question: will the Fed tightening further strengthen the dollar in relation to the real…or is that move is already priced in?

The bottom line: either way, we expect currency volatility to continue throughout Latin America for the foreseeable future (especially in Brazil).

The Prattle Team
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Every week the Prattle team will be publishing its take on a global central bank region. There are 4 regions–European, North American, Latin American, and Asian–and banks from these regions will be scored based on our analysis of central bank communications in that bank over the past week. Indicating the “hawkishness” or “dovishness” of the bank, the scores will be given in numbers ranging from -2 to +2 where -2 is extremely dovish and +2 is extremely hawkish.

For more precise scoring on individual banks, speakers, and communications, you can reach out to Prattle on our contact page or through this link.