USD/BRL: Central bank supports real ahead of the election – Commerzbank

FXStreet Insights Team FXStreet

The real was able to appreciate after the inflation data for August last Friday. The Brazilian central bank (BCB) remains an important support for the real, in the opinion fo economists at Commerzbank.

Incumbent Jair Bolsonaro continues to trail in the polls

“Inflation fell less than expected despite tax cuts and measures to reduce fuel prices. The price categories not affected by the measures continued to rise unabated. That means the likelihood of the BCB’s rate hike cycle being extended has risen. This is likely to strengthen the resilience of the real ahead of the politically turbulent weeks.”

“Concerns about unrest at the occasion of the National holiday last week were not confirmed but the incumbent Jair Bolsonaro continues to trail in the polls. That means the gloves will be off in the election campaign and threatens to affect the real time and again.”

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