Brazilian Real falters ahead of Brazil’s equity market

Rich Ross, highlighted the concerns in the Brazilian Real earlier on the site and we have seen predictable follow through from the equity market in Brazil with the currency move. 

Image courtesy Evandro Miquelito: http://www.flickr.com/photos/emiquelito/

Brazil's Bovespa stock exchange in Sao Paulo

Is it a chicken or egg story?   –  It’s both. 

Currency weakness is often a “tell” on the equity market.  Technical analysis is never the story behind the move, it’s how the move is translated. 

Emerging market equities are beholden to their underlying currencies.  Bovespa suffered today as underlying “domestic” names like retailers, infrastructure and banks bore the brunt of this move, and always will. 

 An easy way to gain exposure to Brazilian equities (short or long) is through the iShares MSCI Brazil Index Fund (EWZ, quote)

 

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