Lower Interest Rates Jeopardize Exchange Rate Stability in Brazil and Mexico

One-month implied volatility for both currencies dropped in Q4.

RIO DE JANEIRO, BRAZIL - After five years of political crisis, economic problems or trade turbulence, Mexico and Brazil are finally experiencing a time of exchange rate stability. But this phase should not last very long.

The one-month implied volatility for both currencies fell in the fourth quarter amid a trade truce between the United States and China and signs of prolonged interest maintenance by the Federal Reserve.

On the domestic front, approval of Brazil's welfare reform, Central Bank interventions and Mexico's trade agreement with the US and Canada (USMCA) helped remove potential uncertainties.

But the key to . . .

To read the full NEWS and much more, Subscribe to our Premium Membership Plan. Already Subscribed?