The Brazilian real firmed slightly to 5.03 per USD in late May as the US dollar weakened and oil prices pulled back. Markets reacted to signs that the US and Iran may be nearing a formal agreement, with reports pointing to a preliminary understanding between the two sides, even though US President Donald Trump has not yet endorsed the terms. The prospect of renewed oil shipments through the Strait of Hormuz helped ease global inflation worries and put additional pressure on the dollar.
On the domestic front, stronger-than-expected GDP figures reinforced expectations that the BCB will maintain a hawkish policy stance. Brazil’s economy expanded 1.1% in the first quarter compared with the previous three months, up from 0.3% in Q4 2025 and representing the fastest pace of growth in a year. The data bolstered the outlook for higher-for-longer interest rates, increasing the appeal of Brazilian assets and supporting demand for the real.
