Brazilian Real Rebounds

2026-02-04 13:46 By Felipe Alarcon 1 min. read

The Brazilian real strengthened toward 5.22 per US dollar, rebounding toward its strongest levels since May 2024 as markets digested the latest Brazilian central bank’s decision minutes.

Policymakers signalled easing is likely to begin in March but emphasized that the pace and size of cuts will remain strictly data dependent, an outcome viewed as a predictable transition rather than a dovish shock.

This reduced the policy risk premium and supported carry and duration inflows while the Selic remained elevated at 15%.

A softer US dollar against emerging market and commodity currencies further eased pressure on USD BRL and improved the real’s appeal to foreign investors.

Support was reinforced by favourable terms of trade and steady foreign demand for Brazilian assets anchored in high real yields.

Elevated US yields have had limited spillover so far, allowing domestic factors to dominate, though persistent fiscal uncertainty and political noise continue to cap upside.



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