By Gabriel Burin

BUENOS AIRES () – Brazil’s real currency is forecast to trade slightly stronger, at around 6 per U.S. dollar at the end of 2025 following a punishing year of losses, a poll of foreign exchange analysts showed.

The real fell around 22% in 2024, mainly due to investor disappointment about 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 throughout the last three weeks of 2024. The real has now stabilized following last month’s meltdown to a record low.

But like many other emerging market currencies, there is little prospect for making much positive headway this year so long as the U.S. retains its dominance in currency market bets. 

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 polled Jan. 3-8.

“Pressure on the real was exacerbated by the market’s negative perception of progress of the government’s spending cut package in Congress,” analysts at Sicredi wrote in a report.

“Despite the (central bank) intervention, unfavorable dynamics for the Brazilian currency continue to be a significant challenge.”

In December, Banco Central do Brasil (BCB) sold $22 billion of its reserves in spot foreign exchange markets and another $11 billion through repurchase agreements. It has not intervened again in the first days of 2025.

“Higher yields in the U.S. and the perception of greater fiscal risk in Brazil should keep the currency at the new level (6 per dollar),” analysts at Banco Inter wrote in a report.

U.S. Treasury yields edged higher on Tuesday after data showed the U.S. economy remained resilient, supporting market expectations the Federal Reserve may have only one quarter-point interest rate cut left to deliver.

Latin American currency strategists are also waiting for what U.S. President-elect Donald Trump announces after his inauguration on Jan. 20, wary of any potential plan to apply sweeping tariffs that could hit the Mexican peso even further.

The currency fell nearly 19% in 2024 on tariff fears as well as concerns related to controversial judicial reforms.

The peso is forecast 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 the January foreign exchange poll)

(Reporting and polling by Gabriel Burin in Buenos Aires; additional polling by Indradip Ghosh and Mumal Rathore in Bengaluru; Editing by Alexandra Hudson (NYSE:))