Brazilian Real Strengthens for 3rd Session

2026-01-06 15:40 By Felipe Alarcon 1 min. read

The Brazilian real strengthened toward 5.37 per US dollar after testing early August lows in late December, reflecting improved risk appetite as geopolitical fears linked to the US attack on Venezuela faded.

The earlier safe haven bid for the greenback failed to offset support for the real from stronger than expected domestic data and a softer US policy outlook.

Brazil’s unemployment rate fell to 5.2% in the moving quarter to November 2025, a record low and well below the prior 5.6% reading and forecasts near 5.4%, underscoring labor market resilience despite still elevated real borrowing costs.

This backdrop supports domestic demand and allows the Central Bank to maintain a hawkish stance if disinflation stalls, while Brazil’s exceptionally high real yields, with 10 year rates still in double digits, continue to underpin portfolio inflows through an attractive carry advantage.



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