RIO DE JANEIRO, BRAZIL - The Brazilian real (R$) is undervalued by about 19% when measured against fundamentals. By the end of the year, the currency could show another large negative divergence as fears about fiscal policy revive, says Emerson Marçal, coordinator of the Center for Applied Macroeconomics at the FGV School of Economics in São Paulo (FGV EESP).
The data from the latest study referred to the end of June and were made available after a lag of up to two months from primary sources. The calculation is made for the actual effective exchange rate. At the end . . .