The Brazilian real weakened toward 5.30 per US dollar as investors reacted to escalating tensions in the Middle East and unprecedented interventions by the National Treasury. The currency came under renewed pressure after the Treasury executed buybacks totaling 49.1 billion reais in an effort to stabilize local interest rates amid a declining liquidity buffer.
Domestic volatility is being amplified by a hawkish Federal Reserve and a sharp rise in Brent crude, which has climbed to its highest levels since mid-2022 following reports that the United States is considering taking control of Kharg Island to help reopen the Strait of Hormuz. Although the Central Bank of Brazil has cautiously begun an easing cycle—cutting the Selic rate to a smaller-than-expected 14.75% at its March meeting—the real’s upside remains capped by the renewed strength of the US dollar.
Market participants remain focused on the Treasury’s capacity to manage debt maturities through 2027, particularly as the government’s cash buffer fell to 6.77 months of coverage in January.
