Brazilian Real Slumps to Record Low

2024-11-28 12:57 By Andre Joaquim 1 min. read

The Brazilian real slumped toward 6 per USD for the first time in history in late November, extending this year’s plunge against the dollar to nearly 20% as growing fiscal concerns pressured all Brazilian asset classes.

The latest selloff was triggered after the Federal government announced it would cut spending by $12 billion in its new fiscal plan, underwhelming the market’s hopes for more aggressive cuts amid concerns that unsustainable budget deficits will spur higher inflation and lift credit risks past their elevated levels.

This added to earlier selling in the week after reports emerged that the government would exempt salaries below BRL 5,000 monthly from paying income tax, adding to deficit risks.

In turn, the local currency was also pressured this year by lower capital inflows, primarily due to lower Chinese demand for key commodities produced in Brazil.

This was underscored by a narrower trade surplus and lower prices for oil, soybeans, and iron ore.



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