USD/BRL: Real well supported, but market turmoil and political uncertainties create volatility – Commerzbank

An attractive real interest rate is supporting the Brazilian Real, but financial market turmoil and political uncertainties remain dragging factors, economists at Commerzbank report.

Attractive real interest rate supports BRL

“Given an attractive Brazilian real interest rate, we see the Real well supported, although current market turbulence and political uncertainties are likely to create volatility.”

“Political risks, fiscal policy problems and a potentially more expansionary central bank after BCB President Neto's term ends at the end of 2024 are likely to weigh on the longer-term BRL outlook.”

Source: Commerzbank Research