Commerzbank forecasts USD/BRL at 5.20 by year-end 2026 and 4.80 by 2027 amid BCB’s hawkish policy and high real rates.
The Brazilian Real (BRL) is expected to face pressure ahead of the October presidential election as markets price political risks, according to analysts. Commerzbank projects USD/BRL to weaken to 5.20 by the end of 2026 and further to 4.80 by the end of 2027, driven by the Brazilian Central Bank’s (BCB) hawkish stance and elevated real interest rates.
The BCB’s policy has kept benchmark interest rates near 14%, with limited scope for further cuts this year. High energy prices and inflation concerns have reinforced expectations for sustained tight monetary conditions, supporting the real’s performance despite near-term election uncertainties.
Analysts note that inflation and interest rate trends will regain dominance in BRL movements post-election, with the real poised to appreciate as political risks subside. The outlook hinges on the BCB maintaining its hawkish bias amid global economic conditions.