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Brazilian real seen sliding toward BRL 5.35 per US dollar
Rabobank expects BRL to weaken after US inflation and labor data ease, while Brazil’s fiscal backdrop and narrowing rate differentials weigh on the currency.
Rabobank analysts Mauricio Une and Renan Alves said softer US inflation and cooling labor data give the Federal Reserve more time to assess policy, a backdrop that could also weigh on the Brazilian real.
In Brazil, Banco Central do Brasil minutes from the Copom highlighted gradual transmission of restrictive policy and unanchored inflation expectations, while Rabobank pointed to a fragile fiscal outlook and narrowing interest rate differentials as key risks.
Rabobank noted that the real ended the prior week at BRL 5.2228 per US dollar, implying a 2.8% depreciation over the week and the weakest performance among 24 emerging market currencies.
With expectations for a smaller rate gap through 2026 and potential global US dollar strength amid Brazil’s election year conditions, Rabobank expects the exchange rate to return to BRL 5.35 per US dollar by year-end.