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Economists at Rabobank see the BRL pressured in the next months and forecast the USD/BRL at 5.45 by the end of 2020 and at 5.10 by the end of the next year.

Key quotes

“On 5 June, Brazil officially reported 645,771 infection cases (from 465,166 last Friday) and 35,026 casualties (from 27,878), now ranking as the country with the second largest amount of cases and third in casualties in the globe.”

“We now forecast GDP growth at -7.3% in 2020 (from -5.1% before) and +4.5% in 2021 (from +3.4%). With a stronger GDP contraction, we now see 2020 CPI inflation lower at 1.3% making room for the BCB to cut the Selic rate down to 2.25% at the next COPOM meeting.”

“Although the high mid-May volatility subsided over the last two weeks, we still see global and domestic uncertainties looming. Upon a stronger and more persistent volatility, Covid-19 and fiscal uncertainties will still leave the BRL pressured until year-end. We now see the USD/BRL trading at 5.45 by end-2020 (from 4.95 before) and at 5.10 by end-2021.”


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