A complicated fiscal outlook for an election year has put pressure on the real and the Brazilian bond yields despite improvement in fiscal/debt numbers this year. Economists at Société Générale expect the USD/BRL to rise towards 6.40 by end-2022.

Politics/financial conditions to outweigh impact of strong commodity prices

“The pressure on currency and yields is likely to continue with political and global factors (prospect of a tightening by the US Fed) both easily outweighing any possible supportive impact from improved commodity prices.”

“We expect the BRL to depreciate to 6.40 by end-2022 against the USD and expect 10-year yields to rise to 13.5%.”