The Braziliancurrency is expected to rally further as Britain's decision to leave the EuropeanUnion spurs demand for emerging market assets, Bloomberg News reported, citing Italy-basedMPS Capital Services Banca per leImprese SpA.

Antonio Cesarano,head of market strategy of the group, said they "expect emerging markets towin favor," which would fuel the continued appreciation of the real followingthe Brexit vote. "Brazil also has this potential breath of fresh air due tothe change in leadership after the impeachment," Cesarano added.

The real hasoutpaced emerging market currencies since the June 23 referendum, gaining 0.2% againstan average 1.3% dip for EMs. The currency is also expected to benefit from a moredovish U.S. Federal Reserve for the first half of 2017, Cesarano said. However,the group revised their third-quarter estimate for the real to 3.5 per dollar from3.7 after the Brexit vote, as investors profit on the recent robust appreciation.