The Brazilian Central Bank's weekly market survey, the Focus Bulletin, has found that market analysts and financial institutions believe in a further devaluation of the dollar against the Brazilian real (R$). Last week the market forecast was for the dollar to close out 2006 at R$2.35. This week it fell to R$2.30. The forecast for 2007 also dropped: down from R$2.50 to R$2.40. The principal reason for the dollar devaluation is the surge in Brazil's foreign trade surplus. Last year it reached US$44.7 billion. And market forecasts are for it to close at around US$40 billion again in 2006. At the same time, the market forecast for the 2006 current account surplus rose from US$8 billion to US$9 billion. And for 2007, the forecast for the current account surplus rose from US$4.25 billion to US$5.25 billion. Market forecasts for domestic economic performance are less upbeat. GDP growth for 2006 is expected to close out the year at 3.50%, with a sluggish 4% increase in industrial sector output. The forecast for 2007 is a GDP increase of 4.13%, down from last week's forecast of 4.25%.
Brazilian forecast is for further devaluation of dollar