Petrobras is a state run company offering oil. The Petroleo Brasileiro SA account has been deferred. According to recent forex news this is very important since it affects the currency value. The deferment means that cash losses and gains in foreign exchange are going to be under the hedge accounting rules. Any debt losses due to foreign exchange rate changes can be deferred. In fact 8 billion BRL have been deferred. These costs are non-operational losses directly related to losses due to foreign exchange rate changes. This announcement was made along with a second stating 6.20 billion in profit was made for the second quarter. The deferment is going to impact the company, thus the market for 7 years. It is a spreading out of the effect the issue could have on the market instead of making it occur all at once.
Forex News Direct Current Events
Brazil’s move for Petrobras is a direct current event that was planned to affect the forex market. Other forex news can be random in which a separate event not related to the financial market can still have an impact. What the new ruling in Brazil is allowing is for the debts the company has suffered, for losses on exchange rate exports, to be hedged. The company has the option of hedging on further transactions in the next seven years to lower the debts incurred instead of taking them all at once. It is a complicated concept and one that will need to be watched for those who intend on trading the BRL with any other currency. For those who do not trade BRL it is an anecdote from forex news.
Random Events impacting Forex News versus Direct
Random events are often about company changes, war troubles, and natural events. A hurricane can certainly affect how a currency performs. There are two events that are most recent for an example of this. The first was 2005 Hurricane Katrina in the USA, which caused more government debt due to the extreme devastation in New Orleans and surrounding areas. The second was the more recent tsunami in Japan. In fact that random event is still affecting a part of Japan since leaks of radiation are a concern on the water supply. Forex news comes into play when examinations of the damages are found to impact the trade balance, imports, exports, and trade for the day. Some events can have such an impact that the market temporarily closes or movement stops as investors try to figure out what is going to change moving forward.
The oil spill in the Gulf of Mexico that occurred within the last decade is also a random event that can affect forex news. Oil as a commodity with an extreme loss as the case was with BP clearly impacts the foreign exchange market. The fact that an oil company in Brazil is hedging under new rules is just another way for random or direct current evens to create a change in the currency rates going forward.