News & analysis

In Q4, the Brazilian real traded in its narrowest quarterly range against the US dollar since the onset of the pandemic, however, this had more to do with bullish and bearish drivers balancing out price action rather than a lack of events: Brazil’s central bank hiked interest rates by a total of 300bps, while the Fed acknowledged inflation may be more persistent than previously anticipated. At the same time, Omicron briefly hampered risk sentiment while the volatile political backdrop in Brazil remained throughout the quarter. Looking ahead to the next quarter, BRL drivers are likely to remain centred around the inflation outlook and the BCB’s responses to the ever-growing price pressures, along with developments in the US monetary space and fixed income markets. As the year progresses, the Brazilian general elections that are set to be held in October will become increasingly relevant for FX markets given the real’s reputation of weakening in times of political uncertainty and upcoming elections.

Read Monex’s January 2022 BRL Outlook:



Author: Ima Sammani, FX Market Analyst



This information has been prepared by Monex Europe Limited, an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Europe Limited or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication.