RGE - Editor Pick: Intra Carry Trade in Latin America
リンク: RGE - Editor Pick: Intra Carry Trade in Latin America.
Vitoria Saddi | Feb 08, 2007Executive summary: Chile con carne, with a samba to follow
The weekly report from Lloyds suggests that the latest trend in Latin markets is the ‘intra carry trade’, between Chilean peso and Brazilian real. The report briefly explains that the Central Bank of Chile may preserve its interest rates at 5% (or even promote another cut in 2007) whereas domestic rates in Brazil will not go below 12% in 2007. In turn, the ‘intra carry trade recommendation’ is be to go long Brazilian real and short in the Chilean peso. Another aspect that should favor the ‘intra carry trade’ is the decline in the implied volatility of the Brazilian real. As such, implied volatility is falling and hence investors can safely expect more stable FX. Such a scenario gives investors more confidence to acquire Brazilian assets given the lower risk of capital losses from sudden downward moves of the real.
