Kathleen Brooks
The strength of Brazil’s economy should be the envy of Europe. Domestic demand has surged in recent months and central bank president Henrique Meirelles fuelled speculation that he will raise interest rates in two weeks time when he said on Monday that his job was to stop the economy from overheating. Currently interest rate futures suggest that the Bank will raise interest rates by 0.5 per cent to 9.25 per cent after inflation soared to a 10-month high of 5.17 per cent in March.

After the European Union pledged to help Greece the euro staged a mini-rally and surged by 2 per cent. However it didn’t last and the euro continues to flounder at March highs. The market remains sceptical about how far this debt package will go to help Greece. Investors are worried that Greece will not actually go to its Eurozone partners, which could make it hard to attract enough investor interest to fund the €11.6bn of debt that matures at the end of May. In total Greek debt obligations this year total €20bn. Greece is not out of the woods yet, and any further problems for its economy could weigh on the euro.

Analysts think that Poland will probably let the zloty appreciate in the aftermath of the air crash that killed more than 90 of the country’s top officials, including Polish president Lech Kaczynski and the central bank governor Slawomir Skrzypeks. This is designed to boost confidence after the crash prompted political uncertainty. In the days leading up to the crash Poland’s central bank had been selling the zloty after it appreciated by more than 6 per cent against the euro since the start of the year. This was the first time the central bank had intervened in the currency for 12 years.