Brazilian Real Slips Ahead of BCB Monetary Policy Decision
The Brazilian real weakened to around 5.50 per US dollar in November, its weakest level since briefly touching 5.60 immediately after President Lula’s runoff victory over Flávio Bolsonaro. Investors monitored the upcoming Copom decision after the first Focus Bulletin since the election showed higher forecasts for inflation, interest rates and the dollar. In contrast, growth expectations were revised down. In addition, the S&P Global Brazil Manufacturing PMI for October remained in contraction territory. Most market participants expect the benchmark Selic rate to remain unchanged at 13.75% per year, amid concerns over the country’s fiscal outlook. Concerns about the lack of fiscal adjustment have intensified amid uncertainty over key appointments, including the Finance Minister, and the direction of fiscal policy during Lula’s next term.
The Brazilian real weakened to around 5.50 per US dollar in November, its weakest level since briefly touching 5.60 immediately after President Lula’s runoff victory over Flávio Bolsonaro. Investors monitored the upcoming Copom decision after the first Focus Bulletin since the election showed higher forecasts for inflation, interest rates and the dollar. In contrast, growth expectations were revised down. In addition, the S&P Global Brazil Manufacturing PMI for October remained in contraction territory.
Most market participants expect the benchmark Selic rate to remain unchanged at 13.75% per year, amid concerns over the country’s fiscal outlook. Concerns about the lack of fiscal adjustment have intensified amid uncertainty over key appointments, including the Finance Minister, and the direction of fiscal policy during Lula’s next term.