Brazilian Real Drops to 4-Year Low, Fueling Inflation Concerns

The Brazilian real dropped today, touching the lowest level in four years. The drop caused concerns that weakening currency will boost inflation, which is already at the elevated level. The currency rebounded as of now.

Analysts raised their 12-month inflation forecast from 5.83 percent to 5.93 percent as the real has dropped 13 percent last quarter. The central bank lifted the main interest rate last month to rein growth of consumer prices, but the economists believe that the impact of such move will short-lived. The currency touched 2.3084 per dollar today, the lowest level since March 2010.

USD/BRL fell a little from 2.3012 to 2.3004 as of 12:33 GMT today.

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