Speaking at the World Economic Forum in Davos, Switzerland, Mr Soros said: "The currency was overvalued, but the currency, if anything, is now undervalued."
However, Mr Soros emphasised the severity of the crisis in Brazil, saying that swift action by the International Monetary Fund was needed.
He said: "Brazil is in a very acute situation because on Friday you effectively had the beginning of a run on the banks and a run on the currency."
Mr Soros' remarks helped the real to climb back above the psychologically important barrier of 2 reals to the dollar.
Market sentiment towards Brazil was also given a boost by the arrival in Brasilia of Stanley Fischer, deputy IMF managing director. Mr Fischer's decision to lend his weight to negotiations between the fund and the Brazilian authorities sparked speculation about an early release of the second tranche of November's $42bn rescue package.
IMF officials and the Brazilian authorities now hope to hammer out by Wednesday new conditions for the release of the funds. The original loan terms were breached three weeks ago when the government devalued the real.
Hopes of a speedy resolution to the Brazilian crisis - coupled with an upbeat Budget statement from President Bill Clinton - sent the dollar climbing against the euro .
The euro sank to a record low of $1.1286 after President Clinton - who yesterday proposed to boost spending on defence, education and healthcare in a $1.77 trillion budget - forecast that the US economy would remain strong.
Evidence from the National Association of Purchasing Managers of a pick- up in the manufacturing sector underlined the strength of the US economy against the euro-zone, analysts said.Reuse content