Brazilian Real Weakens Amid Election Fears

2025-12-16 18:06 By Felipe Alarcon 1 min. read

The Brazilian real weakened toward 5.45 per US dollar, sliding to near two-month lows as renewed political uncertainty overshadowed otherwise supportive monetary signals.

While Copom’s minutes reinforced a vigilant stance, flagged upside inflation risks and kept the Selic at 15% for longer, markets focused on the political risk premium resurfacing ahead of the 2026 election cycle.

The release of new polling and lingering uncertainty around opposition cohesion revived doubts over fiscal discipline and the durability of restrictive policy, limiting the currency’s response to hawkish guidance.

That reassessment coincided with a broader risk-off tone, as equities fell, oil prices dropped sharply and US yields remained elevated, raising the opportunity cost of holding reais.



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