Brazilian Real Rebounds to Early December Highs

2026-01-21 15:28 By Felipe Alarcon 1 min. read

The Brazilian real strengthened past 5.33 per US dollar, reversing its earlier slide toward monthly lows and reaching its strongest level since early December as global markets rotated away from US assets and back into higher-yielding emerging markets.

The move reflects a broader EM pattern, where headline-driven risk aversion briefly pressured currencies before flows quickly reasserted support.

Tensions between the US and Europe over Greenland have weighed on confidence in American assets, driving broad dollar weakness and lifting demand for alternatives.

Domestically, the real has continued to attract foreign inflows despite softer inflation readings that had temporarily pulled forward expectations of Selic cuts.

While disinflation has slightly reduced Brazil’s carry appeal, the yield differential remains wide enough to sustain real-denominated exposure, with election-related noise and the Central Bank’s extrajudicial liquidation of Will Financeira having little impact so far.



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