USD/BRL likely to trade at around 3.35 by end-2017
Source: FxWire Pro - Commentary / 11 May 2017 19:05:05 Eastern Standard Time
The USD/BRL pair rose modestly in the past month given political uncertainty. In recent weeks, worries have increased that proposed pension legislation in Brazil might struggle in Congress. Other factors, such as lower commodity prices and the prospect of additional loosening from the Brazilian central bank also led the Brazilian currency on the back foot.
Still, the recent high of 3.21 shows just a modest retracement from last November’s level of 3.50. These can be viewed as solid reasons to expect additional retracement, noted Lloyds Bank in a research report. Proposed pension reforms are being highly unpopular. Meanwhile, longer-term, most fundamental valuation metrics imply that the Brazilian real is overvalued.
“We forecast USD/BRL to end the year at 3.35”, added Lloyds Bank.© FxWire Pro 2018. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.