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Real seen stronger after Bolsonaro leads Lula in vote

ING expects USD/BRL to open near 5.10, with a move back toward 4.90 seen as too aggressive.

Reported · Written up by our desk · EM Currencies

ING’s Chris Turner at FXStreet said Brazilian assets are positioned to rally after Sunday’s presidential vote, with Flavio Bolsonaro securing 47% of the popular vote versus President Lula’s 45%.

Turner said markets are likely to assume the remaining 8% of votes will tilt more toward the Bolsonaro camp as the two candidates head to a run-off on 25 October.

He linked the expected boost for Brazil’s currency and bond markets to Bolsonaro’s agenda of fiscal austerity and deregulation, and projected USD/BRL to open near 5.10.

Turner added that a return to 4.90 is likely too aggressive for the immediate move.

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