Goldman Sachs note that "the Real....>

BRAZILIAN REAL: Goldman Sachs note that "the Real has continued to underperform

its peers, and-after depreciating roughly 30% versus the Dollar-now features the

worst year-to-date performance of any major currency. The deep BRL

undervaluation this move has created continues to be offset by an unattractive

combination of high domestic uncertainty and low carry. Domestically, political

pressure on President Bolsonaro has been exacerbated by still-elevated

coronavirus incidence. And, with the COPOM delivering a larger-than-expected

75bp cut in the May meeting, and messaging that they stand ready to cut the

Selic policy rate to below 3% in future meetings, which can continue to drive

down real yields, the risk-reward for BRL longs continues to appear

unattractive, in our view. As a result, we are shifting our USD/BRL forecasts to

6, 5.75 and 5.25 in 3, 6 and 12 months, from 5.25, 4.90 and 4.70 previously,

effectively marking-to-market to the recent moves and building in the notion

that BRL is likely to trade weaker than fair value for a considerable period of

time."