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.”
