Societe Generale analysts see Brazil’s easing cycle attracting portfolio flows, stabilizing USD/BRL near 5.05 amid soft inflation data.
Brazil’s real (BRL) may strengthen as expectations of a Banco Central do Brasil (BCB) rate cut in September drive bond inflows. Mid-August inflation slowed to 4.24% from 4.52% in mid-July, the sharpest monthly decline in four years, reinforcing easing prospects.
The disinflation trend, excluding household goods and communication, suggests weakening demand alongside food price normalization. The 10-year BRL government bond yield has already dipped to 14.50% from 14.80% earlier this month, signaling investor appetite for local debt.
Analysts highlight key support for USD/BRL around 5.05/5.04, with the currency potentially benefiting from trade surpluses and agricultural exports if global harvests face El Niño disruptions.