He also believes commodity prices will pick up by year’s end…

According to Nomura’s Tony Volpon, there is an increasing realization that the disappointing growth performance of 2011 was not just an externally-caused cyclical slowdown, but also the result of domestic structural factors. By Nomura’s measure, the “fair” value of the BRL is around R$1.88.

Here is what he had to say (via Forbes):

“It wasn’t just that 2012 could be as bad as 2011, it now looks that Brazil’s potential growth is, in fact, lower than many, both inside and outside the government, believed,” he said.

And he went on the subject:

“In our base case, we assume that Greece stays in the eurozone and the current financial market turmoil gradually subsides. Commodity prices shall gradually rise towards end-2013, with 8% cumulative appreciation. In terms of the current spread to “fair” value, we see it falling by 50% over our forecast horizon. Maintaining the spread at 50% of current levels is recognition that the current currency regime in Brazil has changed to being more administered in nature, and that the government will work to keep BRL relatively “cheap” even in the face of a gradual economic recovery.”

According to Nomura’s models, base case spot price is R$2.00. In the third quarter, it’ll strengthen to R$1.91 and by the fourth head closer to R$1.86. By next year, the BRL will likely be where it was at the start of 2012, around R$1.74.

But many are not in the same camp. Just yesterday, SocGen’s Sebastien Galy warned of a potential “disorderly” fall of the Brazilian currency.

What do you say?

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