FXStreet (Córdoba) – The Brazilian real rose across the board on Wednesday, climbing more than 2% against the US dollar. A lower that expected primary budget deficit favored the real and gave a reprieve to Dilma Ruosseff administration.
USD/BRL opened today around 4.05 and then turned to the downside. Price bottomed at 3.92 and then rebounded. It was trading at 3.977, down 2.12% from yesterday’s closing price. The pair is retreating after hitting an all-time high last week at 4.24. Still is about to end September 10% higher.
Low expectations for BRL
The trend continues to favor the US dollar and most analysts continue to signal that the real is likely to remain under pressure for a while, particularly as the economy continues in recession, inflation remains above 9% and with the credit rating headed to another downgrade.
Analyst from Bank of American Merrill Lynch revised higher the estimation for USD/BRL. “We remain bearish BRL, and we expect it to move above 4 in the coming weeks. Accordingly, we revised our 2015 BRL forecast to 4.10 (vs 3.80 previously) and 2016’s to 4.50 (vs 4.10 previously), with the BRL remaining a key adjustment mechanism for the economy.”
(Market News Provided by FXstreet)