USD/BRL forecast at 5.25 by year-end – Rabobank

Matías Salord FXStreet

The Brazilian real rose on Monday against the US dollar, resuming the upside, but it held below the recent top. Analysts at Rabobank see the USD/BRL trading at 5.25 by year-end and at 4.90 by end-2021.

Key Quotes:

“Despite noise, volatility subsides externally and domestically, leading us to see USDBRL at 5.25 by year-end.”

“On the external front, despite rising numbers of coronavirus infections and more tensions between the US and China, eventually vaccines and a the approval of a EUR750bn stimulus have been more positive for risky assets. Moreover, domestically, MinEcon Guedes finally unveiled the first phase of the government’s tax reform. As a result, volatility subsided and, after running between 5.08 and 5.39 over the week, the USDBRL ended Friday 24 July at 5.2324, appreciating by 2.9% from the previous week. During this period, the DXY fell by another 1.6%, the 5yr CDS spread narrowed by 6bps to 228bps, and the CRY index rose by 1.6%.”

“We now see the USDBRL trading at 5.25 by year-end and at 4.90 by end-2021. On 24 July, Brazil remained the country reporting the second largest amount of infections (2,343K from 2,046K the previous Friday) and fatalities (or 85,238 from 77,851 a week ago), being second in the globe, in both cases, only to the US.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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