Brazil FX Hedges Rise as Bolsonaro Upends Election Optimism
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Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Flavio BolsonaroBrazilian traders are increasingly hedging against a drop in the real after former President Jair Bolsonaro backed his son in next year’s election, instead of supporting investors’ favorite Tarcisio de Freitas.The defensive stance can be observed through the rise of an indicator known as 25-delta risk reversal, which means traders are seeing a higher probability of the Brazilian real falling than rising against the US dollar. The three-month indicator rose to 3.9% right after Flávio Bolsonaro announced his bid and his father’s endorsement on Dec. 5, the highest since July 2020.