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Commerzbank says the Brazilian real is well positioned over the medium term despite expected central bank rate cuts, and that the central bank could cut the Selic by 50 basis points to 11.75%. It warns the real could weaken in the short term if markets price in faster cuts.
The bank argues downside for the currency is limited given the central bank's inflation credibility.
A firmer real makes Brazilian soybean and corn exports less competitive in dollar terms and can slow farmer selling, while a weaker real would support export flows. The outlook is a currency view rather than a supply or demand shock.
octaafrica.netDec 13, 2023After 92 past neutral macro events, Brazilian Real (BRL per USD) moved a median +0.4% over 5 sessions (58% higher; middle half -0.7% to +1.4%), and +0.4% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
