Analysts at the Research Department at BBVA, lowered their growth forecast for the Brazilian economy for 2019 and 2020. They expected USD/BRL to rise to 3.95 by year-end.
Key Quotes:
“The deceleration in the world economy, as well as slow and limited progress in the local adoption of economic reforms –particularly in the social security- will limit the economy’s capacity for growth in the coming years.”
“We expect GDP to grow 1.8% in both 2019 and 2020, slightly above the 1.1% growth recorded in each of the previous two years. Our forecast for 2019 has been adjusted downwards by 0.4 p.p., mainly due to poor incoming activity data, while the forecast for 2020 has remained constant Inflation will remain relatively under control, but will be higher going forward than in the previous two years. The progressive - albeit timid - recovery in domestic demand, the depreciation of the exchange rate and the normalization of food prices will contribute to the upward trend in domestic inflation.”
“The SELIC interest rate will remain at the current expansionary level for a long period. While weak domestic demand and the more accommodative tone of monetary policy in the US make an upward adjustment unlikely in the short term, rising inflation and fiscal risks leave little room for cuts.”
“The shift towards more accommodative policies by the main central banks has reduced financial tensions in both global and local markets. Thus, the exchange rate has neared US$3.8 and could remain close to this level for some time. But the slow progress of both the economy and reforms, as well as the deterioration in the terms of trade, support the forecast of depreciation up to 3.95 at the end of 2019 and 4.05 at the end of 2020.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold price edges higher on risk-off mood hawkish Fed signals
Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.