FX.co ★ Brazilian Real at Over 1-Year High

In September, the Brazilian real appreciated to around 5.3 per US dollar, marking its strongest level since June 2024, primarily due to robust performance in the Brazilian labor market, which supports a restrictive monetary policy stance. Concurrently, the US dollar weakened to a multi-month low. Unemployment in Brazil was recorded at 5.6% for the moving quarter ending in July, the lowest since data collection began in 2012, with an unemployed population close to 6.1 million and total employment reaching a historic 102.4 million. Inflation stood at 5.13% year-on-year in August, an unexpected decrease that alleviated the inflation risk premium on long-term yields. Despite this, the Selic rate remained steady at 15%, maintaining advantageous real interest differentials compared to major international counterparts. Simultaneously, the US dollar experienced a decline to its lowest point in over two months as market expectations included a potential 25 basis-point cut at the Federal Reserve’s upcoming meeting, alongside additional easing anticipated throughout the year, thereby lessening external pressure on the real.