Most currency watchers remain optimistic the real can continue to chalk up additional gains between now and yearend, with the potential for more appreciation in 2008.
Lombardi sees the potential for the real to hit 1.75 by year-end. Lombardi also expects Brazil to earn investment grade ratings by the first quarter of 2008, which should make the country even more attractive as an investment destination and would probably push the currency even higher. Lombardi looks for the real to hit 1.65 by mid-2008.
Rafael de la Fuente, chief Latin American economist at BNP Paribas, also has a bullish outlook, pointing to the 1.75 level as a target.
“Just about everyone in the market sees the real as an appreciation play,” he says.
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