Brazilian real under pressure as domestic political uncertainty looms high: Commerzbank

The Brazilian real is likely to remain under pressure as domestic political uncertainties remain high in the country, according to the latest research report from Commerzbank. Yesterday’s publication of retail sales that recorded a surprise fall in July illustrates that the recovery of the Brazilian economy following the recession of 2015-16 has been rather weak.

Against this background and in view of the ailing national finances concerns are high as to who is going to govern the country in the future. The uncertainty about the outcome of the Presidential elections in October is high.

At the beginning of the week, the Labour Party PT withdrew the candidature of the former President Luiz Inacio Lula da Silva – who would probably not have been allowed to stand anyway due to his conviction for corruption – and instead appointed Fernando Haddad as expected. So there is a little more clarity on that front now.

"On the other hand Jair Bolsonaro, who is leading the polls, is unlikely to participate in the election campaign in person following the knife attack on him last week. It remains to be seen how this will affect the polls," the report added.