Analysts at Nordea Markets, keep a negative bias on the Brazilian real in the short-term but they expect USD/BRL to head lower in 2019.
Key Quotes:
“The Brazilian real was hit markedly in April and May and is currently trading at its weakest levels since Q1 2016 against the dollar. The depreciation pressures came on the back of the rising dollar, fear of contagion from the currency crisis in Argentina and domestic politics. We expect these factors to have a negative impact on the currency in the coming months.”
“The recent BRL depreciation means that the BCB will likely postpone its next rate hike until the end of 2018. Given also the political uncertainty ahead of the presidential election in October, we keep our short-term negative bias on the BRL.”
“In 2019 we expect USD/BRL to gradually decrease as the political uncertainty diminishes somewhat, the BCB begins a new hiking cycle and the USD loses strength.”
Share
