Exchange Rate in Brazil
Brazil - Exchange Rate (average of period)
Real surges on reform optimism
The Brazilian real strengthened notably at the start of 2019, bolstered by market optimism over the new government and reform prospects. On 11 January, the real ended the day at 3.71 per USD, 4.9% stronger than its value the same day in December. In addition, the real was up a notable 15.4% per USD from the same day last year. The real had a tumultuous second half of 2018, with large swings in value seen largely due to the noisy election cycle.
Market optimism over Jair Bolsonaro’s presidency has been the driving force behind the real’s recent strengthening, as hopes that reforms to tackle the country’s bloated fiscal deficit and the fiscally unsustainable pension system could finally materialize. Economic policy in Brazil ground to a near standstill over most of the past year due to the election cycle.
Bolsonaro campaigned on a market-friendly platform and his economic team is headed by the liberal and reform-oriented Paulo Guedes as economy minister, which has lit hope for bold measures to be implemented. That said, the new government needs to move quickly to keep up optimism and there is a risk that the administration does not live up to market expectations. Its ability to pass legislation through Brazil’s divided and fractured Congress is untested and Bolsonaro remains a controversial figure, which could hamper his ability to gel with Brazil’s traditional political parties. On top of this, some conflicting messages over upcoming policy have emerged from the government in recent days, generating uncertainty over the strength of reforms.
Looking ahead, the critical pension reform will be in the spotlight, which could be an upside or downside risk on market sentiment and consequently, the real. Overall, most of our panelists see the real weakening somewhat in the coming quarters, although remaining stronger than the lows seen in the run-up to the October election.
Our panel sees the real ending 2019 at 3.79 per USD and 2020 at 3.80 per USD.
Brazil - Exchange Rate (aop) Data
|Exchange Rate (vs USD, aop)||2.16||2.35||3.34||3.48||3.19|
5 years of economic forecasts for more than 30 economic indicators.
Brazil Exchange Rate (aop) Chart
Source: Thomson Reuters.
|Bond Yield||8.72||-0.82 %||Mar 20|
|Exchange Rate||3.78||-0.13 %||Mar 20|
|Stock Market||98,041||-0.40 %||Mar 20|
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March 20, 2019
At its 19–20 March meeting, the Central Bank of Brazil’s Monetary Policy Committee (Comité de Política Monetária, COPOM) unanimously decided to hold the benchmark SELIC interest rate at its record low of 6.50%, where it has rested since the Central Bank paused its long and aggressive easing cycle in March 2018.
March 18, 2019
In January, economic activity decreased 0.4% in seasonally-adjusted month-on-month terms, according to the Central Bank’s monthly indicator for economic activity (IBC-Br, Indice de Atividade Economica do Banco Central).
March 15, 2019
Retail sales (excluding cars and construction) increased 0.4% from the previous month in seasonally-adjusted terms in January, notably contrasting December’s revised 2.1% contraction (previously reported: +2.2% month-on-month).
March 13, 2019
Industrial production contracted in January, falling 0.8% month-on-month in seasonally-adjusted terms.
March 12, 2019
Taking aim at the government’s strained finances, newly-elected President Jair Bolsonaro presented Congress with a comprehensive social-security reform bill on 20 February.