The Brazilian real has weakened significantly against USD over the past few days. Economists at Commerzbank expect BRL to remain under depreciation pressure.

Hawkish surprises tomorrow might support BRL short-term

“We have been of the view for some time that the BRL rally seen since the start of the year seemed exaggerated in view of the many risks. Due to global inflation and growth concerns as well as high uncertainty resulting from the war in Ukraine, but also due to domestic risks in particular in connections with the Presidential elections in October, we are sceptical as far as the BRL’s development is concerned.”

“Hawkish surprises tomorrow might support BRL short-term, but we do not consider levels of 4.60 in USD/BRL, as seen a few weeks ago, to be justified.”