Brazil’s Real Under Pressure Following Presidential Election

Brazil’s real trimmed losses to around 5.44 per US dollar in late October after weakening to as low as 5.60, near its lowest level since mid-2025, as markets reacted to President Lula’s runoff victory over Flávio Bolsonaro. The selloff reversed gains following the first round, when Bolsonaro outperformed polls and finished ahead of Lula. Investors had viewed a Bolsonaro administration as more likely to curb public spending, seen as a key factor in lowering interest rates. Markets are now reassessing fiscal risks, including persistent primary deficits and rising public debt, alongside institutional uncertainty surrounding the election. Bolsonaro has reportedly refused to concede and challenged the result in court, although Brazil’s Superior Electoral Court has confirmed the outcome.