Rabobank forecasts BRL depreciation by year-end amid Brazil’s fragile fiscal outlook and narrowing rate differentials with the US.
Rabobank expects the Brazilian Real to weaken to BRL 5.35 per U.S. dollar by year-end, citing Brazil’s fragile fiscal backdrop and unanchored inflation expectations. The central bank’s minutes highlighted gradual policy transmission and risks of prolonged high interest rates.
Last week, the Real depreciated 2.8% to BRL 5.2228 per USD, its weakest weekly performance. Softer U.S. inflation and labor data reduced Fed urgency, while volatile oil prices near $90 added external uncertainty.
Narrowing rate differentials and domestic fiscal risks are key drivers for the bearish outlook on BRL.