Brazilian Real: BRL seen weaker into year-end – Rabobank

Rabobank’s strategists Mauricio Une and Renan Alves note that tensions between the United States (US) and Iran have eased slightly with a pause in hostilities, but the outlook for global energy and markets remains highly uncertain. Brent Oil again approached US$100, while the US Dollar (USD) ended last week at Brazilian Real (BRL) 5.0831. Rabobank projects USD/BRL at 5.35 by year-end, citing narrowing rate differentials and Brazil’s fragile fiscal backdrop.

De-escalation pause but risks linger

"Following several days of escalation, the weekend was marked by the continued pause in hostilities between the United States and Iran, representing the first tangible sign of de-escalation in nearly two weeks."

"Even so, the environment remains characterized by significant uncertainty."

"The U.S. dollar closed the previous week at BRL 5.0831, implying a 0.56% appreciation of the Brazilian real against the dollar during the week, the seventh-best performance among 24 emerging-market currencies."

"Given expectations of a narrower interest-rate differential between Brazil and advanced economies throughout 2026, together with a potential recovery of the U.S. dollar globally amid Brazil’s fragile fiscal backdrop and an election year, we expect the exchange rate to reach BRL 5.35 per U.S. dollar by year-end."

"Tensions between the United States and Iran remained elevated, sustaining concerns over global energy supply and pushing Brent crude oil prices closer to US$100 per barrel, although prices partially eased toward the end of the week."