The Brazilian real rose from 5.2212 to 5.0131 versus the US dollar in June. According to MUFG Bank experts, the BRL is expected to continue to rise in the short future, with the USD/BRL pair ending the year around 5.10.
“GDP increased by 1.2 percent in the first quarter, and despite the pandemic’s worsening in March, GDP may be marginally positive in the second quarter. Market investors are raising their GDP forecasts for 2021 to over 5.0 percent, predicting a return to pre-pandemonium levels this year “”Standard.”
“The Central Bank has taken a hawkish stance, increasing the Selic policy rate by 225 basis points this year and promising to normalize monetary policy, which for us means another 225 basis point hike until the rate reaches its neutral level of 6.50 percent in October. The carry trade is becoming more appealing as a result of this position.”
“Higher tax collections and the prospect of a lower debt-to-GDP ratio have resulted in a healthier fiscal condition than predicted. Furthermore, the political commotion created by the epidemic probe in the Senate is not deterring the economic agenda, as the bill to privatize the Eletrobras electric power business was passed, and progress on tax and administrative changes was made.”
“Investors are unwinding some of their long USD positions in this climate. This improved situation arrived sooner than predicted, but it will only persist through the end of the year. As a result, we’re sticking with our forecast of 5.1000 by the end of 2021, which is lower than the present rate.”/n
