Brazil still has “a little fat” in its exchange rate, central bank monetary policy director Aldo Mendes said. The real is a little weaker than central bank models indicate it should be, Mendes said to reporters after an event in Rio de Janeiro. He declined to comment on whether Brazil is considering any more foreign-exchange measures.

Eoin Treacy's view The Brazilians made no secret of their disquiet with the strength of the Real from as early as 2010. However, it was not until the last year that measures to devalue the currency gained traction. The Real fell 36% from an August 2011 high of $1.56 to a recent low of $2.13. It is notable that the Brazilian authorities are now signalling that the devaluation has gone far enough and are willing to tolerate a slightly stronger level for the currency. However, a sustained move below the 200-day MA, currently near $2 would be required to question medium-term US Dollar outperformance.

The Bovespa stock market Index has laboured under increased supply over the last 18 months and the weakness of the currency has deterred foreign investor interest. Nevertheless, it has held a progression of higher major reaction lows since August 2011 and a sustained move below 55,250 would be required to question medium-term scope for continued higher to lateral ranging.