By Gabriel Burin
BUENOS AIRES (Reuters) – Brazil’s real currency is expected to trade slightly stronger, around 6 per U.S. dollar at the end of 2025, after a tough year of losses, a Reuters poll of currency analysts shows.
The real fell about 22% in 2024, mainly due to investor disappointment over a budget package introduced by President Luiz Inacio Lula da Silva’s economic team to correct worrying debt trends.
The losses in Brazilian assets only stopped after the Brazilian central bank sold almost 10% of its reserves in the last three weeks of 2024. The real has now stabilized after last month’s collapse to a record low.
But like many other emerging market currencies, there is little prospect of making much positive progress this year as long as the US maintains its dominant position in the currency markets.
The currency is expected to trade at 5.94 per dollar within a year, 2.7% stronger than Tuesday’s closing value of 6.10, according to the average estimate of 25 analysts surveyed Jan. 3-8 .
“The pressure on the real was exacerbated by the market’s negative perception of the progress of the government’s austerity package in Congress,” Sicredi analysts wrote in a report.
“Despite (the central bank’s) intervention, adverse dynamics for the Brazilian currency remain a significant challenge.”
In December, Banco Central do Brasil (BCB) sold $22 billion of reserves on the foreign exchange spot market and another $11 billion through repurchase agreements. She did not intervene again in the first days of 2025.
“Higher rates in the US and the perception of greater fiscal risk in Brazil should keep the currency at the new level (6 per dollar),” Banco Inter analysts wrote in a report.
U.S. Treasury yields rose on Tuesday after data showed the U.S. economy remained resilient, supporting market expectations that the Federal Reserve may have just one more quarter-point rate cut to make.
Latin American currency strategists are also waiting to see what newly-elected US President Donald Trump announces after his inauguration on January 20, wary of any potential plan to implement sweeping tariffs that could further hit the Mexican peso.
The currency fell almost 19% in 2024 due to tariff fears and concerns related to controversial judicial reforms.
The peso is expected to trade at 20.90 per dollar in 12 months, which is 2.8% weaker than Tuesday’s value of 20.31.
(Other stories from Reuters January currency poll)
(Reporting and polling by Gabriel Burin in Buenos Aires; additional polling by Indradip Ghosh and Mumal Rathore in Bengaluru; Editing by Alexandra Hudson (NYSE:))
