The Brazilian real weakened to a one year high against sterling, with inflation hitting 7.7% – likely due to the impact of higher taxes on fuels and a hike in electricity tariffs. Although depreciation of the real was stronger than expected, inflation is likely to climb even higher – prompting further rate changes from the Brazilian Central Bank.
Emerging market currencies sold off yesterday as a combination of US interest rate fears, Chinese data and Greece concerns drove the Mexican Peso and Turkish Liras to new lows. Against a basket of key currencies, the dollar was near its highest point in almost 11 years, as investors brace themselves for higher U.S. rates.
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