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

Brazil real to strengthen 'much more', says economy minister

EconomyJun 23, 2021 12:26PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Brazil's Economy Minister Paulo Guedes speaks during a ceremony to launch a program to expand access to credit at the Planalto Palace in Brasilia, Brazil, August 19, 2020. REUTERS/Adriano Machado

By Jamie McGeever

BRASILIA (Reuters) - Brazil's real is now at a more "favorable" level and is likely to strengthen much further, Economy Minister Paulo Guedes said on Wednesday, the day the currency hit a one-year high of 4.9386 per dollar.

In an online event hosted by the Sao Paulo Federation of Industries, Guedes said a "consistent and coherent" policy mix will push the dollar further below 5.00 reais and help keep the long end of the interest rate curve under control.

"The exchange rate now is much more favorable ... but the equilibrium (dollar/real) rate is possibly much lower than where it is just now," Guedes said.

"It (equilibrium rate) is well below the current level, which for the first time (in a year) is breaking below 5.00. I think it is going to go much lower, as everyone sees (our) consistent and coherent policies," he said.

The real has surged almost 20% since trading at 5.8760 in March, coinciding with the central bank beginning an interest rate-hiking cycle that now looks much more aggressive than initially planned.

The dollar fell as low as 4.9386 reais on Wednesday. A growing number of analysts have revised up their outlook for the real in recent weeks, with some expecting the dollar to fall as low as 4.50 reais in the second half of the year.

Guedes repeated the government's commitment not to break its spending cap rule limiting public spending growth to the previous year's rate of inflation, although he noted that current high levels of inflation give it a bit more leeway.

President Jair Bolsonaro is expected to announce a three-month extension to emergency cash transfers for the poor soon, perhaps as early as this week, Guedes said.

On tax reform, Guedes said total receipts will be very strong with the economy expanding around 5%, which is now the broad 2021 growth consensus. Strong tax receipts will allow the government to cut taxes "immediately", he said.

Brazil real to strengthen 'much more', says economy minister

Related Articles

Dollar stands firm with Fed decision in focus
Dollar stands firm with Fed decision in focus By Reuters - Jul 28, 2021

By Tom Wilson LONDON (Reuters) - The dollar stood firm on Wednesday after being pinned down earlier, with investors holding off on placing major bets ahead of the outcome of a...

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’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
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?
Replace the attached chart with a new chart ?
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'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
Sign up with Email