Fitch’s decision to upgrade Brazil’s sovereign debt rating this week provides another sign that fiscal concerns in the country are easing, but we remain sceptical that the government will be able to stabilise the public debt-to-GDP ratio. Elsewhere, the news just out that the IMF will front-load disbursements to Argentina (pending Executive Board approval) should help to tide the economy over till the election. But the overvalued exchange rate remains the elephant in the room. Finally, the region’s monetary easing cycle will step up a gear over the coming week, with central banks in both Chile and Brazil set to lower interest rates.
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