The outlook for the Brazilian Real has brightened. Economists at Commerzbank believe that the USD/BRL pair could challenge the 5 level.

Brazilian central bank remains BRL supportive

“While BCB kept the key interest rate unchanged at 13.75%, as expected, it left no doubt that it has its eye on inflation expectations, which had picked up in view of the government's planned support measures. The BCB is clearly committed to further tightening measures if inflation does not fall further toward its inflation target as expected.”

“As the real interest rate is expected to remain clearly positive, we see the Real remaining well supported.” 

“If the USD weakness continues, a serious test of the 5 mark in USD/BRL is by no means out of the question.”