Fiscal risks weigh on the Brazilian real - ING

Fiscal risks are weighing on The Brazilian real, said analysts at ING.

"The Brazilian real has been one of the worst performers over the last week," wrote Chris Turner, ING's Global Head of Markets and Regional. "All the high-yielders have been hit on the unwind of carry trade strategies as volatility has risen. Yet the fiscal side, which is Brazil's Achilles Heel, has also reared its head again. Earlier this week Brazil's Finance Minister suggested that Brazil might have to soften its fiscal targets this year."

"We continue to much prefer the Mexican peso to the Brazilian real. We also are worried about Chile's peso and that real rates have been cut too low too quickly at a time of continuing dollar strength."

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