The of Brazil left its benchmark interest rate unchanged at 14.25% for a 5th straight meeting on March 2nd, taking into account domestic and especially external risks and in spite of soaring . Six of eight policymakers voted to hold SELIC rate and two decided voted for a hike.
Selic hikes would be counter-productive since the expectations of debt monetization through higher would increase.
Retail sales and are the key areas to look out for in this week in Brazil.
USDBRL forms with downward convergence above overbought territory, as a result we eye on shorting near month for hedging downside risks as the dips are expected to drag further but not a drastic slumps.
RUB: In Russia, we forecast a decline in headline in February to 8.4% y/y, from 9.8% last month. However, this was the result of base effects, and the current trend is not favourable.
The RUB has sold off again in recent months as global oil prices have fallen, causing monthly to accelerate.
Annualized, monthly is now at 11%, just equal to the key rate of the Bank of Russia ( CBR ). Thus, we think the CBR is likely to keep its key rate unchanged at its March MPC .
This week's key data elements for Russia are FX reserves and balance of trade.
USDRUB Monthly technical outlook: same is the case with this pair like USDUSDBRL, a pattern with convergence on to continue for next month or so, we advise no go short in NDFs for potential downside risks.