Brazil Carry Trade Beckons Investors Ignoring Political Risk
- Volatility declines as traders cut real depreciation bets
- Real offers Latin America’s second-best carry-trade potential
This article is for subscribers only.
Investors scared off by Brazil’s political turmoil are returning to its currency, lured by the potential for Latin America’s second-highest carry return.
The selloff in the real immediately after fresh corruption allegations were leveled at President Michel Temer last month has now subsided, with one-month price swings falling below expected volatility levels based on options prices. Traders of forward contracts have cut their bets for depreciation to a 14-month low, according to data compiled by Bloomberg.