Brazilian Real to Rally from 6-Month Low

The Brazilian real is expected to strengthen on Monday after fluctuating near a six-month low last week, as investors react to Flávio Bolsonaro’s stronger-than-expected performance in the first round of the presidential election. Bolsonaro secured 47.03% of valid votes, ahead of incumbent Luiz Inácio Lula da Silva at 45.16%, setting up a runoff on October 25. The result is likely to be viewed positively by investors who see Bolsonaro as more inclined to address Brazil’s fiscal pressures and reduce government spending. Markets may therefore price in a greater probability of fiscal adjustment and potentially lower borrowing costs over time. However, the election remains unresolved, and the narrow first-round margin means volatility could remain elevated as the campaign enters its final weeks.