Exchange Rate in Brazil
Brazil - Exchange Rate
Real loses some of its earlier gains in July
The Brazilian real weakened in recent weeks, losing some of the previous month’s gains, following the Central Bank’s decision to cut interest rates and due to continued Covid-19 related concerns. On 10 July, the real traded at BRL 5.32 per USD, which marked a 6.6% depreciation over the previous month. Moreover, the real was down 29.5% year-on-year and 24.5% year-to-date.
After rebounding in the previous month as containment measures across the globe started to be lifted, improving investor sentiment in turn, the real depreciated again over the past weeks largely due to the Central Bank’s decision to axe the SELIC rate to a new record low of 2.25% to shore up the economy against the fallout from the Covid-19 crisis. The Bank also hinted that there might still be room for an additional rate cut, which exerted further downward pressure on the currency. Moreover, rising numbers of coronavirus cases and increasing worries over surging infections dampened investors’ appetite for risky assets, while President Bolsonaro testing positive for Covid-19 weighed further on the real.
Going forward, although the real is projected to strengthen slightly from current levels amid a sustained positive external scenario, risks are tilted to the downside. A protracted Covid-19 health crisis, coupled with elevated public spending to mitigate its impact, will pressure the already weak fiscal accounts, which could weigh on the currency. Continued political noise poses an additional downside risk.
Our panel sees the real ending 2020 at 5.32 per USD and 2021 at 4.93 per USD.
Brazil - Exchange Rate Data
| 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|
| Exchange Rate (vs USD) | 3.96 | 3.25 | 3.31 | 3.88 | 4.02 |
Brazil Exchange Rate Chart
Source: Thomson Reuters.
Brazil Facts
| Value | Change | Date | |
|---|---|---|---|
| Bond Yield | 6.79 | -0.82 % | Dec 31 |
| Exchange Rate | 4.02 | -0.13 % | Jan 01 |
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Economic News
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August 4, 2020
Industrial output expanded 8.9% month-on-month in seasonally-adjusted terms in June, which was above May's 8.2% increase.
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Brazil: Business confidence strengthens albeit remains in pessimistic territory in July
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The Getulio Vargas Foundation’s (FGV, Fundaçao Getúlio Vargas) industrial business confidence came in at 89.8 in July, up from June's 77.6, recording a notable improvement over the previous month However, the index still remained entrenched below the 100-point threshold, separating pessimism from optimism among businesses.
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Brazil: Current account logs another surplus in June
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Brazil’s current account balance registered a surplus for the fourth month straight in June, logging a USD 2.2 billion surplus.
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Brazil: Consumer confidence improves, but remains in negative territory in July
July 24, 2020
The seasonally-adjusted consumer confidence index published by the Getulio Vargas Foundation (FGV) rose to 78.8 in July from June's 71.1 amid improved expectations over the economic recovery.
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