FX.co ★ Brazilian Real Rebounds from 1-Month Low

The Brazilian real appreciated to approximately 5.36 per US dollar, rebounding from one-month lows of 5.40 observed on November 21st. This strengthening was influenced by a more dovish outlook from the US Federal Reserve, which overshadowed local policy expectations. The probability of a US interest rate cut in December increased to about 80% following comments from the Fed, which in turn alleviated some pressure on the real. Brazil's substantial interest rate differential, with the Selic rate standing at 15%, continues to attract capital focused on carry trades. Additionally, domestic economic indicators have bolstered this trend, with the Focus Bulletin revising the 2025 IPCA forecast down to 4.45% and foreign direct investment in October reaching approximately US$10.94 billion, marking the highest level since 2022. The president of Brazil's central bank, Galípolo, has reiterated that the current restrictive policy will be maintained, with any potential easing expected to be gradual and likely commencing in early 2026. This steady approach reassures investors that the interest rate advantage will remain intact, contributing to the currency's recovery.