By Gabriel Burin
BUENOS AIRES (Reuters) – Brazil's real currency is expected to trade slightly stronger, at around 6 per U.S. dollar at the end of 2025 after a punishing year of losses, a Reuters poll of foreign exchange analysts showed .
The real fell by around 22% in 2024, mainly due to investor disappointment over a fiscal package introduced by President Luiz Inacio Lula da Silva's economic team to correct worrying debt trends.
Losses in Brazilian assets only stopped after Brazil's central bank sold nearly 10% of its reserves over the last three weeks of 2024. The real has now stabilized after a recession the last month to a low level.
But like many other emerging market currencies, there is little chance of a big advance this year as long as the US maintains its dominance in the money market stakes.
The currency is expected to trade at 5.94 per dollar in one year, 2.7% stronger than its closing value of 6.10 on Tuesday, according to the median estimate of 25 analysts surveyed January 3-8 .
“The pressure on the truth was aggravated by the negative perception of the market on the progress of the government's cost-cutting package in Congress,” wrote analysts at Sicredi in a report.
“Despite the (central bank) intervention, unfavorable dynamics for the Brazilian currency remain a major challenge. “
In December, Banco Central do Brasil (BCB) sold $22 billion of its reserves in foreign exchange markets and another $11 billion through repurchase agreements. He has not intervened again in the first days of 2025.
“Higher yields in the US and increased fiscal risk awareness in Brazil should keep the currency at the new level (6 per dollar),” analysts at Banco Inter wrote in a report.
US Treasury yields edged higher on Tuesday after data showed the US economy remained resilient, supporting market expectations that the Federal Reserve may have just one quarter-point interest rate cut left. for delivery.
Latin American currency strategists are also waiting for what US President Donald Trump will announce after he is inaugurated on January 20, remaining wary of any potential plan to impose large tariffs that could hit the Mexican peso even further.
The currency fell by nearly 19% in 2024 on fears of tariffs as well as concerns over controversial legal reforms.
The peso is expected to trade at 20.90 per dollar in 12 months, or 2.8% weaker than its value of 20.31 on Tuesday.
(Other stories from January's Reuters foreign exchange poll)
(Reporting and voting by Gabriel Burin in Buenos Aires; Additional voting by Indradip Ghosh and Mumal Rathore in Bengaluru; Editing by Alexandra Hudson (NYSE:))
