Brazilian Real likely to remain under downward pressure for the time being, says Commerzbank

The Brazilian real is expected to remain under downward pressure for the time being, according to the latest research report from Commerzbank.

The arrest of former President Michel Temer and his Minister of Energy, Wellington Moreira Franco, last week captured a lot of attention on the FX market. After all, politicians should care about the pension reform and not be preoccupied with corruption scandals again.

The tricky thing was that Moreira Franco is the father-in-law of the President of the Chamber of Deputies, Rodrigo Maia, who is an important supporter of the pension reform and thus actually an ally of the government – at least in this case.

However, there have been isolated verbal attacks against Maia by the government, which in turn have raised concerns that Maia might refuse to support the important reform. Yesterday evening it was announced that Temer and Moreira Franco had been released from prison.

"It remains to be seen whether the affair is off the table now. However, this episode has made clear that the approval of the pension reform cannot be taken for granted," the report further commented.