BRL continues to depreciate

Brazil real continues to depreciate vs. the USD on the back of lower commodity prices and a deteriorating fiscal outlook. 

On top of these two significant factors affecting the BRL, the central bank continues with its strategy to partially roll-over existing FX swaps coming due, adding more pressure to an already weak real. 

Finally, political coordination between the president and congress continues to be at a low level, further complicating the effort of the president to turn around a very complicated budget situation that could derive in lower sovereign ratings. 

"The BRL is expected to continue trading with a weak tone in the coming days and testing USD-BRL 3.50 in the coming days is now a clear possibility", says Commerzbank.