Barclays Changes BRL Forecasts

Barclays says that in light of the recent surprisingly rapid deterioration of fundamental support, and the potential for election pressure, it has changed its USD/BRL forecasts to BRL1.75 in 1 month (previously BRL1.70), BRL1.80 in 3 months (previously BRL1.70), 1.90 in 6 months (previously BRL1.75). It keeps its 12-month forecast unchanged at BRL1.75. The shop adds that December’s employment report reinforces the notion that growth is set to moderate in the coming months. Meanwhile, it says, the current account surprised in December with an almost $6.0bn deficit (versus the $3.6bn deficit expected by consensus), which should be repeated in January. Barclays thinks the current account deficit will rise to around $50bn-$70bn in 2010-11 versus $36bn or so in 2009.