Brazilian Real Strengthens on Carry Trade

2026-07-22 17:45 By Isabela Couto 1 min. read

The Brazilian real strengthened to 5.06 per USD in July, the highest in seven weeks, on renewed carry-trade interest.

Strikes between the US and Iran escalated and US officials downplayed the chances of diplomacy, increasing geopolitical concern and driving emerging-market investors to momentarily pivot away from the dollar.

The high real interest rates by the Central Bank of Brazil made Brazilian real assets attractive among investors, as risks of high inflation and wide deficit spending by Brasilia drove the Selic rate to remain elevated.

Still, foreign trade remains a key concern.

Investors are awaiting measures from the government to mitigate the impact of new US tariffs.

However, key exports including beef, coffee, rare earths, energy products, aircraft, and aircraft parts are exempt from the new 25% tariff.



News Stream
Brazilian Real Strengthens on Carry Trade
The Brazilian real strengthened to 5.06 per USD in July, the highest in seven weeks, on renewed carry-trade interest. Strikes between the US and Iran escalated and US officials downplayed the chances of diplomacy, increasing geopolitical concern and driving emerging-market investors to momentarily pivot away from the dollar. The high real interest rates by the Central Bank of Brazil made Brazilian real assets attractive among investors, as risks of high inflation and wide deficit spending by Brasilia drove the Selic rate to remain elevated. Still, foreign trade remains a key concern. Investors are awaiting measures from the government to mitigate the impact of new US tariffs. However, key exports including beef, coffee, rare earths, energy products, aircraft, and aircraft parts are exempt from the new 25% tariff.
2026-07-22
Brazilian Real Weakens on US Tariffs
The Brazilian real weakened slightly to 5.09 per USD in mid-July from 5.07 earlier in the month after the US announced a new 25% tariff on Brazilian imports, effective July 22th. The measure is expected to reduce dollar inflows into Brazil by weighing on exports to the US, potentially weakening the country's trade surplus and slowing the recent appreciation of the real. A decline in export revenues could put upward pressure on the exchange rate in the coming months, particularly if markets revise down Brazil's trade balance outlook or reassess the country's risk profile. Meanwhile, lingering geopolitical risks in the Middle East and expectations that the Federal Reserve could keep interest rates higher for longer continued to limit gains in the Brazilian currency.
2026-07-16
BRL Hits Strongest Level in Over Three Weeks
The Brazilian real strengthened to 5.11 per USD from 5.17 in early July, it's highest level in over three weeks, tracking other emerging market currencies as the US dollar weakened. Risk appetite improved after signs that diplomatic talks between the US and Iran are continuing despite recent tensions, easing geopolitical concerns and reducing demand for safe-haven assets. Domestically, the real also found support after Brazil's annual inflation slowed to 4.64% in June, below market expectations. Still, lingering risks of renewed Middle East disruptions and the prospect of further Federal Reserve tightening continued to limit gains.
2026-07-10