Brazil’s real: further to fall?

Jonathan Wheatley, The Financial Times, 9/29/2015 

The fall of the Real this week has left many wondering how much further it can fall. One suggestion came from Daniel Tenengauzer and colleagues at RBC Capital Markets on Friday: another 28 per cent.
Even with the real at R$4.20 to the US dollar — a level it passed briefly on Thursday before the central bank intervened and got it back below R$4 — RBC reckons Brazil’s currency is 5.3 per cent above fair value in terms of its trade-weighted real effective exchange rate (REER). It expects it to fall another 28 per cent in REER terms before finally turning the corner in April 2017.

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