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Brazilian Real’s Bumpy Days Hint at Tough Path Out of Losses
Bloomberg 1/11/2021
(Bloomberg) Brazilian real traders are facing a rough start to the year.
The currency has lived up to its reputation as the most volatile in the world, changing course midway in every session in 2021 so far.
The wild swings give a hint of what investors can expect ahead. While analysts forecast the real will strengthen about 4% to 5 per dollar in 2021, breaking a four-year streak of losses, they say the ride will be bumpy as fiscal and political uncertainty leave the currency more sensitive to global drivers than peers.
Stars Align for Brazil’s Real to Outshine Mexican Peso in 2021
Bloomberg 12/22/2020 George Lei and Justin Villamil
(Bloomberg) The Mexican currency has outperformed its Brazilian counterpart for four straight years. That dynamic may finally be about to change.
Booming commodities, rock-bottom valuations and a hawkish turn at central bank are all poised to support the Brazilian real. But it’s politicians who hold the key to turning that into a long-term rally.
“Rates moving in different directions might not be enough by itself,” said Brendan McKenna, an foreign-exchange strategist at Wells Fargo in New York. “Brazil needs to shore up its fiscal position and make progress on the reform agenda for the real to gather longer-term momentum.”