Brazil: Brazilian real fluctuates amid global and domestic uncertainties
January 15, 2015
The Brazilian real (BRL) has been losing ground against the U.S. dollar in recent weeks, continuing the trend started in April 2014. The real closed 2014 at 2.66 BRL per USD, which represented a 12.5% depreciation over the end of 2013. The real continued depreciating in the first days of 2015 hitting 2.71 BRL per USD on 5 January. The depreciation comes amid a poor outlook for the Brazilian economy for 2015. Low commodity prices are expected to weigh on export revenues and the country is experiencing a severe drought in agricultural areas.
Since peaking on 5 January, the real has appreciated closing at 2.61 BRL per USD on 15 January. The real has fluctuated along with Brazil’s domestic politics, and has appreciated as confidence grows in new Finance Minister Joaquim Levy’s ability to balance the budget. Amidst this backdrop, LatinFocus Consensus Forecast panelists expect the real to end 2015 at 2.38 BRL per USD. In 2016, panelists believe the real will depreciate further to 2.52 BRL per USD.