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Rabobank expects USD/BRL to move toward 5.35 by year-end
Rabobank links the outlook to a narrower Brazil versus US interest-rate differential and a firmer US dollar, after the Copom cut the Selic to 13.75%.
Rabobank analysts Mauricio Une and Renan Alves said they expect the USD/BRL exchange rate to rise toward 5.35 by year-end, citing expected changes in the interest-rate gap between Brazil and advanced economies and the direction of the US dollar.
They noted the Federal Reserve raised rates by 25 bps and signaled a more restrictive path, while Brazil’s central bank, Copom, cut the Selic rate to 13.75%. The Real weakened slightly to BRL 5.1462 per USD, but still outperformed most emerging-market peers.
Rabobank pointed to the idea that the external environment, including a potential US dollar recovery and Brazil’s fragile fiscal backdrop in an election year, could weigh on the Real. The analysts also said they expect the rate differential to narrow through 2026 and that the Fed’s path remains key to the currency move.
In their view, stagflationary pressures in the US make a single further rate hike more likely, with any additional increase tied to developments including the Middle East and the resilience of the US economy.