According to a report by Bitcoin.com News on May 11, Robin Brooks, a senior fellow at the Brookings Institution and former Goldman Sachs chief FX strategist, said the Brazilian real (BRL) has been “badly hit and is severely undervalued,” and expects the USD/BRL exchange rate to ultimately fall below the 4.5 level in the coming months. He defines a rate of $1 to 4.5 reais as the currency’s “fair value” exchange rate.
Robin Brooks’ Forecast: Two Key Drivers and Target Exchange Rate
Citing Robin Brooks’ analysis, Bitcoin.com News said he pointed to the following two main factors driving BRL appreciation:
First, the United States wants to end the current Iran war as soon as possible, which would boost the appeal of carry-trade currencies such as the Brazilian real.
Second, ongoing uncertainty around navigation conditions in the Strait of Hormuz benefits Brazil, as a major commodities and oil exporter, thereby supporting the real’s exchange rate.
Brooks, using 2022 as a reference, noted that during Russia’s invasion of Ukraine, the Brent crude oil benchmark price surged by 40%, and the Brazilian real subsequently rose by 20%. He believes the current geopolitical environment could generate a similar pattern.
In an interview, Brooks said: “In 2022, the exchange rate never really fell below my expected 4.50 fair value, but I think this target is now within reach. I expect the USD/BRL exchange rate to ultimately fall below 4.50 in the coming months.”
Risk Factors: Uncertainty Around Brazil’s Election
According to Bitcoin.com News, risk factors affecting the Brazilian real’s outlook include the upcoming Brazilian presidential election. The race currently appears to be a close contest between incumbent President Luís Inácio Lula da Silva and the son of former President Jair Bolsonaro, Flávio Bolsonaro, which could disrupt the process of the real rising above 4.5.
Market Background
According to Bitcoin.com News, since tensions in the Middle East intensified, the Brazilian real has stood out among emerging market currencies and has become one of the best-performing currencies in emerging markets (only behind the Hungarian forint).
FAQ
What are the sources and background behind Robin Brooks’ forecast for the Brazilian real?
According to a May 11, 2026 report by Bitcoin.com News, the forecast comes from Robin Brooks, a senior fellow at the Brookings Institution and a former Goldman Sachs chief FX strategist. He expects the USD/BRL exchange rate to fall below the fair value level of 4.5 in the coming months.
What are the two drivers Robin Brooks cited for the Brazilian real’s appreciation?
According to Bitcoin.com News, the two factors Brooks pointed to are: the United States wants to end the Iran war as soon as possible to boost carry currencies; and uncertainty in navigation through the Strait of Hormuz benefits Brazil as a commodities exporter.
What is the main risk factor for the Brazilian real to rise above 4.5?
According to Bitcoin.com News, Brooks identified the upcoming Brazilian election as the main risk. The election is a close contest between incumbent President Lula and Flávio Bolsonaro, which could disrupt the real’s appreciation process.
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