The Brazilian real strengthened to below 5.00 per US dollar on Friday after the release of the first polls for the presidential runoff. A Datafolha survey showed Senator Flávio Bolsonaro with 49% of voting intentions versus 45% for President Lula, a statistical tie at the edge of the poll’s two-percentage-point margin of error. An Atlas/Bloomberg poll, however, put Flávio at 51.1% against 45.7% for Lula, ending the statistical draw seen in that firm’s previous runoff scenario.
Markets tend to view Bolsonaro as more fiscally conservative, a stance that resonates against a backdrop of elevated domestic interest rates and weak business activity. His economic team is reportedly weighing spending cuts equivalent to around 2% of GDP. Flávio’s first-round lead over Lula, which ran counter to most polling forecasts, drove the real to a 17‑month high on Monday.
In parallel, the Brazilian central bank (BCB) conducted a regular foreign‑exchange swap rollover auction on Friday. These operations are used to curb exchange-rate volatility, particularly during periods of heightened political and economic uncertainty.
