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Rabobank expects USD/BRL to rise to 5.35 by year-end

Rabobank points to narrowing Brazil versus advanced economy rate differentials and Brazil’s fragile fiscal backdrop as reasons for the weaker real outlook.

Reported · Written up by our desk · Major Pairs

Rabobank strategists Mauricio Une and Renan Alves say the Brazilian real is likely to weaken into year-end, even though tensions between the United States and Iran have eased slightly after a pause in hostilities. They frame the environment for global energy and markets as still highly uncertain.

FXStreet reports that the US dollar ended the prior week at BRL 5.0831 per USD. Based on their assessment, Rabobank projects USD/BRL at 5.35 by year-end.

Rabobank attributes the move to narrowing rate differentials between Brazil and advanced economies through 2026. The bank also cites Brazil’s fragile fiscal backdrop, a possible broad recovery in the US dollar, and an election-year dynamic.

In FXStreet’s recap of the strategists’ view, Rabobank notes that the BRL’s BRL 5.0831 level implied a 0.56% appreciation against the dollar during the week, ranking among the best performances across 24 emerging-market currencies. Despite that recent strength, Rabobank expects the exchange rate to shift higher by year-end.

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