Dealers count cost of Santander's Brazilian real hedges

Real pain

Andre Hubner

Dealers in Brazil's foreign exchange markets were caught between a rock and a hard place in September. The rock: Brazilian authorities’ determination to arrest the appreciation of the real, which had been driven steadily higher by carry-trade investors drawn to Brazil’s double-digit interest rates. The hard place: a mammoth hedging programme designed to protect one European bank’s Brazilian operations from a slide in the real.

The hedging activity accounts for anywhere from 50% to 70% of the

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Stemming the tide of rising FX settlement risk

As the trading of emerging markets currencies gathers pace and broader uncertainty sweeps across financial markets, CLS is exploring alternative services designed to mitigate settlement risk for the FX market

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