The Brazilian central bank’s interventions have stabilised the real over the past 24 hours, but we think the recovery will soon run out of steam and have actually cut our end-year forecast to 4.50/$. Elsewhere, the cautious tone of the Mexican central bank’s statement accompanying last night’s rate cut supports our view that the easing cycle doesn’t have much further to run. Finally, Argentina’s government took a harder line with bondholders over the past week, strengthening our view that large haircuts are likely.
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