Brazilian Real reaches new lows as risk aversion takes over once more

Is the Brazilian currency at an all-time low? Not exactly

The Brazilian currency hit a new nominal low against the U.S. Dollar, with the foreign exchange rate reaching USD 1 : BRL 5.18. The worst-case scenarios economists had envisioned only weeks ago are happening—and investors are avoiding any kind of risk.

The American currency is getting stronger worldwide, as investors seek safer assets.

Brazil’s benchmark stocks index Ibovespa is set to have another rough day, and analysts warn about the possibility of a new circuit breaker being triggered. It would be the sixth in 10 days.

By the end of the day, Brazil’s Central Bank will decide on whether or not to slash benchmark interest rates—currently at 4.25 percent a year. Despite announcing the end of the easing cycle in the bank’s last decision, economists now believe in a cut of at least 0.5 percentage points, to minimize Covid-19’s effect on the economy.