Brazilian Real Strengthens Ahead of Selic Decision

2026-04-28 17:05 By Isabela Couto 1 min. read

The Brazilian real strengthened to 4.98 per USD, near their highest level in two years, amid the outlook of higher foreign exchange inflows and restrictive monetary policy by the Central Bank of Brazil.

The ongoing conflict between Iran and the US has suspended oil flows from the Middle East, lifting global energy prices and increasing foreign exchange inflows for alternative energy exporters such as Brazil.

The higher energy prices also caused headline inflation to rise to 4.4% in the first half of April, approaching the central bank's upper threshold of 4.5%.

A small majority of the market expects the BCB to deliver a 25bps rate cut this week, although threats of unanchored inflation expectations flagged by the central bank supported bets of a hold.

Still, the elevated Selic rate of 14.75% maintained carry trade demand that supported the real.



News Stream
Brazilian Real Strengthens Ahead of Selic Decision
The Brazilian real strengthened to 4.98 per USD, near their highest level in two years, amid the outlook of higher foreign exchange inflows and restrictive monetary policy by the Central Bank of Brazil. The ongoing conflict between Iran and the US has suspended oil flows from the Middle East, lifting global energy prices and increasing foreign exchange inflows for alternative energy exporters such as Brazil. The higher energy prices also caused headline inflation to rise to 4.4% in the first half of April, approaching the central bank's upper threshold of 4.5%. A small majority of the market expects the BCB to deliver a 25bps rate cut this week, although threats of unanchored inflation expectations flagged by the central bank supported bets of a hold. Still, the elevated Selic rate of 14.75% maintained carry trade demand that supported the real.
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Brazilian Real Rises to Over 2-Year High
The Brazilian real strengthened to 4.95 per dollar, the strongest level since March 2024, amid support from higher oil prices and the outlook of high interest rates. The ongoing conflict between Iran and the US has suspended oil flows from the Middle East for nearly two months, lifting global energy prices and increasing foreign exchange inflows for alternative energy exporters such as Brazil. On top of that, the pro-inflationary risks from higher energy prices drove officials in the Central Bank of Brazil to suspend the outlook of multiple rate cuts signaled before the war, boosting foreign investment in Brazilian fixed-income assets. These developments were enough to strengthen the currency despite of the flight to harder assets that typically occur with geopolitical tensions.
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