Brazilian Real Near Monthly Lows

2026-01-20 13:50 By Felipe Alarcon 1 min. read

The Brazilian real weakened toward 5.4 per US dollar, hovering near monthly lows as a global risk-off environment compounded with a less hawkish outlook for the central bank.

Renewed US tariff threats against Europe have revived global demand for safety and liquidity, lifting the dollar against emerging-market currencies.

Domestically, inflation has cooled faster than anticipated, with recent readings returning closer to the central target range, prompting markets to bring forward expectations of Selic cuts.

That shift has narrowed Brazil’s carry appeal and reduced the incentive for foreign investors to maintain real-denominated exposure at current levels.

Political and regulatory signals have added to the unease, as Finance Minister Fernando Haddad’s proposal to broaden central bank oversight of investment funds has been interpreted by some participants as a potential constraint on institutional autonomy, reinforcing caution toward the currency.



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