FXStreet (Córdoba) – The Brazilian real reached a fresh 12-year low against the US dollar and is among the worst performers in the currency market on Tuesday. USD/BRL broke above 3.40 and peaked at 3.431 after the rating agency Standard and Poor’s lowered the sovereign credit outlook of Brazil from stable to negative.
USD/BRL has been rising constantly since last week when it broke above 3.25 and today is rising more than 1.50%. Emerging market currencies are trading at multi-year lows against the US dollar but over the last five days, the real has been the worst, losing 8%.
Downgrade approaching?
According to S&P the outlook is now negative because of execution risks to the currency policy changes. A rising deficit, a scandal corruption and lower growth expectations are among the top risks. The current rating is BBB-, the lowest level of “investment grade”.
(Market News Provided by FXstreet)