Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Brazil FX in somber mood as pandemic roars on, pressure mounts on government: Reuters poll

Economic IndicatorsApr 01, 2021 02:20PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Brazilian Real and U.S. dollar notes are pictured at a currency exchange office in Rio de Janeiro

By Gabriel Burin

BUENOS AIRES (Reuters) - Brazil's real is starting the second-quarter in a somber mood as the coronavirus pandemic continues to wreak havoc in Latin America's biggest economy and as pressure builds on the government, a Reuters poll showed.

The Brazilian currency lost around 10% in the first three months of the year, briefly revisiting its record closing low of 5.88 per U.S. dollar set last year. That mark could be easily breached soon.

Thousands of Brazilians are dying daily of COVID-19, the economy is struggling and opposition to President Jair Bolsonaro has increased. Under attack from all sides, he has reacted by appointing loyalists in key positions.

"Domestic risks are for BRL downside: the resurgence of COVID-19, potential for further fiscal pressures should the pandemic deteriorate and last for longer, and political uncertainty," said Juan Prada (OTC:PRDSY), an FX strategist at Barclays (LON:BARC).

The real is seen at 5.31 per U.S. dollar in 12 months, according to 27 analysts polled March 26-30. The estimate represents an expected 8.4% gain from Wednesday but a big 3.9% drop from last month's survey, presaging more tension ahead.

Out of 11 respondents who answered a separate question about the currency's trajectory over the coming year, a majority of 6 said the trend was for a weaker real, four viewed it on a stronger footing and 1 neutral.

The unit will probably remain soft even after a steep interest rate hike last month that started a policy tightening cycle. The country's central bank head said later the overall adjustment may not be so aggressive.

Besides the high toll in lives from the raging health crisis and its impact on governability, economists worry Bolsonaro's drive to tighten the purse strings could run aground amid increasing social demands before next year's election.

Brazil's Treasury has warned the 2021 budget approved by Congress threatens one of the government's key pillars of fiscal stability and urged the estimates for mandatory spending be brought up to a more "realistic" level.

In Mexico, the peso is likely to appreciate 1% in one year to 20.32 per U.S. dollar. However, the 12-month outlook for the currency also worsened significantly from March's poll, as investors remain nervous.

Like Brazil, the country is suffering a severe fresh wave of coronavirus cases. Its death toll is likely at least 60% higher than the confirmed number, putting it in excess of 300,000, according to government data.

(For other stories from the February Reuters foreign exchange poll:)

(Reporting and polling by Gabriel Burin in Buenos Aires; Additional polling by Manjul Paul and Mumal Rathore in Bengaluru; Editing by Bernadette Baum)

Brazil FX in somber mood as pandemic roars on, pressure mounts on government: Reuters poll
 

Related Articles

Dollar dips, while sterling, NZ dollar gain
Dollar dips, while sterling, NZ dollar gain By Reuters - Oct 19, 2021

By Karen Brettell NEW YORK (Reuters) - The dollar pared losses on Tuesday as Treasury yields climbed but remained lower on the day as other currencies, including sterling, were...

Dollar Down Over Weaker-Than-Expected U.S. Data
Dollar Down Over Weaker-Than-Expected U.S. Data By Investing.com - Oct 18, 2021

By Gina Lee Investing.com – The dollar was down on Tuesday morning in Asia, remaining near the bottom of its recent range. Weaker-than-expected U.S. factory data and increasing...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email