INSUBCONTINENT EXCLUSIVE:
The Brazilian real continued to gain ground against the US dollar early Tuesday, with the USD/BRL exchange rate falling to R$5.6849, down
decline of 1.03% against the real, settling at R$5.6861
This downward movement reflects broader strength in emerging market currencies.It is driven by positive economic data from China, progress
in Ukraine peace negotiations, and advancing oil prices
The greenback has now accumulated a substantial 7.98% decline against the real since the beginning of 2025.Key Market DriversImproved Fiscal
surplus of R$104.1 billion, which exceeded market expectations of R$102.1 billion.Brazilian Real Surges to 4-Month High as Dollar Slumps
(Photo Internet reproduction)This fiscal discipline has led to a larger-than-anticipated decline in gross public debt, falling to 75.3% of
This unexpected growth has bolstered confidence in the Brazilian economy despite recent downward revisions in growth projections.Monetary
Policy Expectations: The Monetary Policy Committee (Copom) is meeting this week with widespread expectations for a 100 basis point increase
in the Selic rate to 14.25% on Wednesday
sentiment toward emerging markets, driven by positive news from China and potential progress in Ukraine peace talks, has created a favorable
USD/BRL pair has been in a steady downtrend since reaching an all-time high of 6.75 in December 2024
The current level of 5.68 represents a significant 15.85% recovery for the real from these lows
The pair has broken below its 50-day moving average, suggesting continued bearish momentum in the near term.Looking at recent daily
movements, the USD/BRL pair has declined consistently over the past week:March 14: 5.756 BRL per USDMarch 13: 5.820 BRL per USDMarch 12:
favorable interest rate differential for the real
We expect this to continue supporting the Brazilian currency in the near term
However, potential volatility from US tariff announcements remains a risk factor.Looking AheadMarket participants are closely watching two
crucial central bank meetings this week:1
Copom Meeting: The Brazilian central bank is widely expected to raise the Selic rate by 100 basis points to 14.25% on Wednesday, as
previously signaled by policymakers.2
Federal Reserve Decision: The Fed will also announce its monetary policy decision on Wednesday, with operators projecting rates to remain
tariff plans, which have generated uncertainty in global markets and raised concerns about a possible US recession
Any announcements on this front could significantly impact emerging market currencies, including the real.Trading Economics forecasts the
USD/BRL to trade at 5.76 by the end of the current quarter
It could potentially rise to 5.83 in 12 months, suggesting the recent real strength may face some headwinds in the longer term.
