Brazilian Real Breakout Call: Robin Brooks Sees $/BRL Below 4.5
Former Goldman FX strategist Robin Brooks says the Brazilian real still has “a lot further to go.” He argues it has been undervalued and is likely to move beyond its “fair value” level near 4.50 (USD/BRL). He points to a “perfect storm” similar to 2022, when geopolitical shocks lifted oil and helped the real rise about 20%.
Brooks’ two main catalysts are tied to U.S.–Iran tensions and oil-route uncertainty. First, he expects the U.S. to move toward ending the current Iran conflict, which would support “carry” currencies like the Brazilian real. Second, uncertainty around the navigability of the Strait of Hormuz could boost commodity and oil exporters such as Brazil, adding further support for the Brazilian real.
He expects the Brazilian real could break below 4.50 in coming months, with the market potentially pricing a move of roughly 20%—a rally Brooks compares to 2022.
Key risk: Brazil’s upcoming election (a contest viewed as a toss-up between President Luiz Inácio Lula da Silva and Flávio Bolsonaro) could disrupt momentum and delay the Brazilian real’s push to the 4.5 area.
For traders, this is a macro FX thesis (Brazilian real, carry/risk appetite, and Middle East risk premia) rather than a crypto-specific catalyst.
Neutral
The article is primarily an FX/macro thesis about the Brazilian real, not a crypto driver. A bullish case for the Brazilian real (break below 4.50) could modestly improve EM carry confidence and global risk sentiment, which may be supportive for crypto via broader liquidity. However, the stated swing risk from Brazil’s upcoming elections and ongoing Middle East uncertainty also implies higher volatility, which can cut both ways.
Historically, geopolitical oil-route shocks tend to move FX, rates, and risk premia first; crypto then follows liquidity and risk-on/risk-off flows rather than the FX level itself. So the direct impact on crypto market stability is likely limited, but traders may watch USD/BRL and EM risk indicators as a secondary signal for overall risk appetite in the near term.