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US Dollar to Brazilian Real (USD/BRL) Exchange Rate Gains as Growth Estimates Cut
Published: 5 Jan at 5 PM Tags: Dollar Exchange Rate, Currency Exchange, Exchange Rates, Economy, Inflation,
The US Dollar was trending in a stronger position across the board on Monday as investors bet that the Federal Reserve will increase interest rates in the first half (if not the first quarter) of this year in response to encouraging US growth and improvement in the nation’s employment sector. However, the USD/BRL pairing was able to advance from a low of 2.6931 to a high of 2.7108 in response to the news that Brazil’s growth estimates for 2015 have been negatively revised.
With the nation’s economy really struggling to pick up steam, and the US preparing to tighten fiscal policy, Brazilian economists negatively revised their growth forecasts for 2015 from 0.55% to 0.5%.
In the final few months of 2014 the US Dollar to Brazilian Real exchange rate softened by 8.8%. As the slide in the Real pushed up the price of imports, the pace of consumer price gains is likely to have accelerated. Industry experts have increased their inflation projection for the year to 6.53% to 6.56%. According to Bloomberg; ‘President Dilma Rousseff appointed a new economic team and promised cuts to spending after pledging to boost growth and slow inflation in her second term, which started next week. The Real’s depreciation and an increase in regulated prices threaten to undermine her efforts.’ Brazil is still to publish its trade balance stats. The report could impact the USD/BRL pairing.
If this week’s influential US reports, including the nation’s Federal Open Market Committee meeting minutes and the Non Farm Payrolls stats, support the case in favour of the Fed hiking borrowing costs within the next couple of months, the US Dollar to Brazilian Real exchange rate could fall further in the days ahead. Brazilian data to be aware of includes the HSBC Composite/Services PMI (due out tomorrow), Thursday’s Industrial Production stats and Friday’s inflation numbers.
With the nation’s economy really struggling to pick up steam, and the US preparing to tighten fiscal policy, Brazilian economists negatively revised their growth forecasts for 2015 from 0.55% to 0.5%.
In the final few months of 2014 the US Dollar to Brazilian Real exchange rate softened by 8.8%. As the slide in the Real pushed up the price of imports, the pace of consumer price gains is likely to have accelerated. Industry experts have increased their inflation projection for the year to 6.53% to 6.56%. According to Bloomberg; ‘President Dilma Rousseff appointed a new economic team and promised cuts to spending after pledging to boost growth and slow inflation in her second term, which started next week. The Real’s depreciation and an increase in regulated prices threaten to undermine her efforts.’ Brazil is still to publish its trade balance stats. The report could impact the USD/BRL pairing.
If this week’s influential US reports, including the nation’s Federal Open Market Committee meeting minutes and the Non Farm Payrolls stats, support the case in favour of the Fed hiking borrowing costs within the next couple of months, the US Dollar to Brazilian Real exchange rate could fall further in the days ahead. Brazilian data to be aware of includes the HSBC Composite/Services PMI (due out tomorrow), Thursday’s Industrial Production stats and Friday’s inflation numbers.
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Source: moneytransfer.co.uk