Brazilian Real Under Pressure Ahead of Election
The Brazilian real weakened to near 5.23 per USD in October, tracking gains by the US currency against other emerging-market currencies. The dollar followed an upward trend against several emerging-market currencies amid expectations of further Fed tightening, as elevated inflationary pressures stemming from the Middle East situation coincided with resilient US economic performance. With the election approaching, financial markets are also being influenced by political developments, with recent polls reinforcing expectations of a tight presidential race. On the data front, Brazil’s manufacturing sector posted its sharpest deterioration in operating conditions since April 2023, according to S&P Global PMI data. Recent labor market data remained consistent with gradual cooling and expectations for GDP to be near flat in 3Q26, despite strong payrolls, keeping expectations for continued Selic easing intact.
23 per USD in October, tracking gains by the US currency against other emerging-market currencies. The dollar followed an upward trend against several emerging-market currencies amid expectations of further Fed tightening, as elevated inflationary pressures stemming from the Middle East situation coincided with resilient US economic performance. With the election approaching, financial markets are also being influenced by political developments, with recent polls reinforcing expectations of a tight presidential race.
On the data front, Brazil’s manufacturing sector posted its sharpest deterioration in operating conditions since April 2023, according to S&P Global PMI data. Recent labor market data remained consistent with gradual cooling and expectations for GDP to be near flat in 3Q26, despite strong payrolls, keeping expectations for continued Selic easing intact.