Brazilian Real Weakens Amid Election Corncerns

2026-01-14 18:54 By Felipe Alarcon 1 min. read

The Brazilian real weakened toward 5.4 per US dollar after briefly firming earlier in the week, as US dollar resilience and rising political risk outweighed Brazil’s still compelling carry appeal.

A new Genial Quaest poll showed President Lula leading comfortably across first and second round scenarios, reviving concerns over fiscal discipline, policy continuity, and a greater role for state intervention as the election cycle comes into sharper focus.

At the same time, the dollar stayed well supported by solid US data, with retail sales rebounding strongly in November and core PPI holding flat, reinforcing expectations that the Federal Reserve will keep rates unchanged this month and push back the start of easing.

Mixed but cautious Fed rhetoric has helped anchor US yields, limiting room for BRL appreciation despite Brazil’s restrictive monetary stance and elevated interest rate differential.



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