FX.co ★ Brazilian Real Near Mid-2024 Highs

The Brazilian real has surged past 5.20 against the US dollar, reaching its highest levels since May 2024. This strength is attributed to domestic monetary signals and a weakened US dollar. The Brazilian Central Bank (Copom) has maintained the Selic rate at a historically high 15%, indicating that any future rate cuts will be cautious and conditional. This policy has ensured a favorable real yield differential, attracting foreign investment into Brazilian assets. Additionally, positive terms-of-trade and consistent demand for local fixed income have bolstered the currency's resilience. On the international front, the US dollar has weakened due to uncertainty in Washington, political signals allowing currency depreciation, and continued investment in real assets, easing pressure on the real. However, the upward momentum is tempered by domestic political and fiscal issues, which continue to raise concerns about Brazil's fiscal outlook.