Macroeconomic Forecast Brazil

BMI View: The Brazilian real has continued its sell-off against the US dollar, trading around BRL1.8500/US$ at the time of writing, and we are not yet convinced that the bottom has been reached. With eurozone sovereign woes likely to persist as we head into 2012, we do not rule out the real back below recent lows at the BRL1.9000/US$. That said, beyond the current bout of risk aversion we anticipate a return to moderate appreciation, in line with our 2012 average exchange rate forecast of BRL1.8000/US$.

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