The Brazilian real has softened to the weakest levels since the pandemic-era sell-off in early 2020, ING’s FX analyst Chris Turner notes.
USD/BRL to trade at 6.25 in 12 months
“If the real did not have enough to worry about with the threat of a global trade war, President Lula's foot-dragging on fiscal reforms is adding to the woes. Here his plans to raise income tax exemptions for the poor are eating into fiscal consolidation plans and leaving Brazilian assets on the ropes.”
“Overnight, it looks like the government has announced BRL70bn of spending cuts after all (there had been fears that this would be delayed), but let's see whether that is enough to stabilise the real. Additionally, in the back of investors' minds, is that 2026 is an election year and that the current fiscal laxity is just a warm-up to events in 2025.”
“In our recent USD/BRL update in FX talking, we revised our 12-month USD/BRL forecast to 6.25 which seems to be the direction of travel.”
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
EUR/USD struggles to hold above 1.0550, eyes on German inflation data
EUR/USD stays on the back foot and trades in negative territory slightly below 1.0550 on Thursday. Soft regional inflation data from Germany seems to be weighing on the Euro as investors await nation-wide Consumer Price Index figures.
GBP/USD trades below 1.2700 on modest USD recovery
GBP/USD stays under modest bearish pressure and fluctuates below 1.2700 on Thursday. The US Dollar corrects higher following Wednesday's sharp decline, making it difficult for the pair to continue to push higher. US markets will remain close on Thanksgiving Day.
Gold clings to small daily gains near $2,650
Gold (XAU/USD) reverses an intraday dip to the $2,620 area and trades near $2,650 on Thursday, albeit it lacks bullish conviction. Investors remain concerned that US President-elect Donald Trump's tariff plans will impact the global economic outlook.
Fantom bulls eye yearly high as BTC rebounds
Fantom (FTM) continued its rally and rallied 8% until Thursday, trading above $1.09 after 43% gains in the previous week. Like FTM, most altcoins have continued the rally as Bitcoin (BTC) recovers from its recent pullback this week.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.