Brazil, like the rest of the main emerging powers in the world, accuses the ravages of the virus with special virulence and a good example of this is the behavior of its currencies so far this year. However, the Brazilian real, like the rest of the BRICS currencies -Brazil, Russia, India, China and South Africa- present "good prospects" according to Ebury, "as long as these countries are able to control the pandemic."
Brazil, where the Government of Jair Bolsonaro has adopted some ultra-lax measures to control the pandemic, would have at least 8 million people infected by coronavirus, according to a study by the Ministry of Health. This represents five times more than the number of cases confirmed by the Government (almost 1.5 million), a figure that already places the country as the second in the world with more infected and more victims, almost 62,000.
As a consequence, the Brazilian currency, since the beginning of March, has lost a quarter of its value against the US dollar, however, Ebury expects it to continue to recover in a year and a half. "Brazil's macroeconomic fundamentals should allow it once the worst of the crisis is over," says the financial institution specialized in international payments and currency exchange. Specifically, he predicts that it will be changed by 4.50 reais per dollar in mid-2021.
The forecasts that the firm is considering for the Russian ruble they are almost a carbon footprint, as your balance of risks this year would tilt in your favor. "A bullish movement in oil prices it should help the currency, and Russia's tight macroeconomic fundamentals will likely ensure that the country continues to maintain its appeal to foreign investors, ”he says. In addition, it places the improvement of the ruble against the dollar at the level of 60 rubles in the second quarter of next year.
With regard to the yuan, the encouraging steps in health and economic matters taken by the Government of Beijing lead Ebury to think that "The worst is over for the Chinese economy". Consistent with this perception, the entity remains optimistic about the future of the yuan, which would be well placed to post gains from current levels until the end of 2021 against the US dollar. Specifically, it sees the USD / CNY cross at the 6.75 level on that horizon.
THE RAND AND THE INDIAN RUPIA, MORE MODEST
The South African Rand, another of the most fragile currencies in the world during the pandemic along with the Brazilian real and the Mexican peso – in March and April it lost 17% of its value against the dollar – has recovered more modestly. than their peers. The financial institution waits for the currency of South Africa small earnings from its current level against the US currency, which, in his opinion, will weaken. From the level of 17.00 rand per dollar in the third quarter of 2020, it is forecast to stand at 16.50 rand in mid-2021.
Refering to Indian rupeeEbury highlights the strong intervention of the currency by the Reserve Bank of India to respond to the risk of the pandemic. In his opinion, this intervention by the RBI will continue if the interest in the currency decreases. Therefore, Ebury adjusts its forecasts to show a almost flat rupee around 75 rupees per dollar until 2021.
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