Ex-Goldman Strategist: Real Could Strengthen Below 4.5

Robin Brooks, senior fellow at the Brookings Institution and former chief FX strategist at Goldman Sachs, told investors the Brazilian real could strengthen below 4.50 per U.S. dollar as changes in Middle East tensions boost Brazil’s commodity exports.

Brooks set 4.50 BRL per dollar as the currency’s fair value and expects the exchange rate to fall below that level in the coming months.

He identified two geopolitical drivers behind the outlook. A swift end to the U.S. conflict with Iran would reduce risk premia and support carry currencies such as the real; higher interest rate differentials in Brazil make the currency more attractive when global risk appetite rises.

The second factor is uncertainty over the navigability of the Strait of Hormuz. Disruptions or threats in the strait could lift global commodity prices and benefit Brazil as a major exporter of agricultural goods, metals and oil, improving the country’s terms of trade and supporting the real.

Brooks noted that in 2022 the Brent oil benchmark climbed about 40% after Russia’s invasion of Ukraine and the real rallied roughly 20%. He observed, “In 2022, we never quite made it below my fair value of 4.50, but I think that’s now in play,” and said a similar percentage move could occur if comparable geopolitical conditions persist.

He also pointed to recent performance trends. Since 2025 the real has been among the best-performing emerging-market currencies, ranking behind only the Hungarian forint in recent gains.

Brooks warned domestic politics remain a material risk. Brazil is heading into a closely contested presidential race between incumbent Luiz Inácio Lula da Silva and Flávio Bolsonaro, and election uncertainty or sudden shifts in policy expectations could interrupt the currency’s advance.

Market analysts cite Brazil’s exposure to commodity markets and relatively high interest rates as structural supports for the real when external conditions favor risk assets. A sharper rise in commodity prices or an improvement in global risk sentiment could draw capital into Brazilian assets and put downward pressure on the USD/BRL exchange rate.

Carry currencies tend to benefit when investors seek higher yields in a lower-risk environment. Disruptions to oil shipping through the Strait of Hormuz generally push energy prices higher, which can change trade balances for commodity exporters and importers. Brooks’s outlook links those external factors to a potential near-term strengthening of the real while noting that election outcomes and other domestic developments could alter that path.