According to Rabobank, the US Dollar should close this year at R$ 4.00, and then begin to retreat to the level of R$ 3.90 at the end of 2020. This is what the study “Perspectives for agribusiness” points out. Brazilian 2020”, released this week by the financial institution specialized in this segment.
“As for the exchange rate, amid local challenges (risks of continuing reforms) and an unfavorable global context (eg economic slowdown, trade tensions), we project an exchange rate of 4.00 per dollar at the end of this year and 3. 90 per dollar at the end of 2020”, points out the Rabobank report.
According to this analysis, the sharper slowdown in the world's main economies, in addition to a possible worsening of 'Sino-American' trade tensions or even a setback regarding the fiscal reform agenda in Brazil, could devalue the Real against the Dollar.
On the other hand, the bank highlights, positive surprises in relation to the progress of macroeconomic adjustments, inflows of resources due to new concessions and privatizations, and the resumption of monetary easing by the central banks of the main economies, could increase the value of the Real against the Dollar.
GDP
According to the financial institution, “solely controlling the growth of mandatory pension spending is not enough to guarantee a sustainable trajectory for public debt in the short term. Other fiscal measures, such as administrative reform and the creation of mandatory expense adjustment mechanisms in fiscal emergency situations, for example, are of equal importance and are already being addressed by the economic team.”
“The approval of the pension reform with a comfortable margin of votes in both houses could be a good omen, as it seems to make clear the convergence of the Executive and Legislative branches around the urgency of the fiscal situation. Furthermore, the current administration seems to understand the need to attack other bottlenecks in the Brazilian economy in parallel. The formal independence of the central bank, advances in privatizations and concessions, tax reform, simplification of regulations, improvement of the business environment and the exploration of foreign trade via new commercial agreements are examples of how there is still much to be done”, points out Rabobank.
“In the event of setbacks or frustrations in the continuity of adjustments, the current market optimism tends to reverse, leading to worse market conditions and economic expectations. The financial impacts could be felt at any time, depending on the level of patience of investors and global financial conditions”, he concludes in his study.
Source: agrolink
