Aussie overvalued, Brazil won’t let real rise

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Aussie ( FXA , quote ) overvalued, Brazil ( EWZ , quote ) won't let the real rise, Goldman Sachs Asset Management Chairman Jim O'Neill says.

The Central Bank of Brazil increased its interest rate this week for the first time since July 2011.

The move is an attempt to keep inflation in check.  The central bank is selling currency swaps to help the real from falling to fast while pushing reverse currency swaps to help exports.

I agree with Jim O'Neill.

But when commodities were trading at this level last year AUD was at 0.9800.

SELL Aussie if you have been selling everything else that drives this economy (commodities: copper, ore, coal, gold).

The monetary policy element of the AUD bid will erode as they need to loosen up the pressure on their economy.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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