09:10 AM EST, 11/12/2025 (MT Newswires) -- The real (BRL) has performed well in 2025, said ABN Amro of Brazil's currency.

Indeed USD/BRL has declined from 6.20 to 5.35 or -13.5% mainly because of a relatively strong economy, higher interest rates, strong positive real yields as well as general weakness in the US dollar (USD), noted the bank.

Inflation expectations remain above the inflation target across all horizons. The central bank (BCB) has an inflation target of 3.0%, with a tolerance interval of more or less 1.50 percentage points. With inflation above target and strength in the labor market, the BCB hiked the policy rate to 15% in June 2025, the highest level since 2006.

Since then, the central bank has been data-dependent, and it left rates on hold last Wednesday. However, the BCB will likely ease in 2026 and this could reduce the attractiveness of the real, stated ABN Amro.

In addition, developments on the political front could result in temporary weakness in the currency. So, the bank has a "modest" upside for the real during its 2026 forecast horizon.