Brazilian Real Rebounds Following Post-Election Rout

Brazil’s real recovered some ground, strengthening to around 5.36 per US dollar after weakening to as low as 5.60, near its weakest level since mid-2025, immediately following President Lula’s runoff victory over Flávio Bolsonaro. On October 26th, the first trading day after the election, the dollar closed at R$5.40, up 8.21%, amid market turmoil. Markets are focused on fiscal policy, particularly the government’s commitment to controlling spending and public debt, which has risen significantly in recent years. The appointment of the next finance minister will be a key signal. Markets had viewed a Bolsonaro administration as more likely to curb public spending, seen as essential to lowering interest rates. Brazilian assets had rallied after the first round, when Bolsonaro finished ahead of Lula and outperformed polling estimates.