22.09.202514:16:25UTC+00Brazilian Real Weakens Past 5.3 USD

The Brazilian real has depreciated beyond 5.3 per US dollar, pulling back from its high of 5.29 reached in June 2024. This recent shift follows a reversal in the previously weaker dollar and subdued domestic growth and policy signals that diminished the real's previous advantage. Initially, the US dollar's decline had bolstered the real, but regained strength post the Federal Reserve’s decision and Chair Powell’s cautious remarks, leading to a firmer dollar. On the domestic front, Brazil's economic activity data has underperformed, with the IBC-Br index declining 0.5% in July, marking a third consecutive monthly downturn. Although unemployment remains relatively low at 5.6% for the July moving quarter, which lessens the central bank’s pressure to implement rate cuts, it doesn't entirely counterbalance the growth concerns. Additionally, political signals hinting at future rate cuts have weakened the appeal of carry trades supporting the real, while concerns about trade tensions and external risks continue to exert additional pressure.