The Brazilian real weakened to around 5.19 per USD in late June, mirroring broad dollar strength against nearly all major currencies. The greenback gained ground versus both G10 and emerging-market peers after hawkish projections from Federal Open Market Committee members in their latest policy decision led markets to price in more than one rate hike by the US Federal Reserve this year.
In Brazil, the dollar drew additional support from the minutes of the latest Copom meeting, which reinforced expectations that the benchmark Selic rate may be cut in the near term, even as policymakers acknowledged that upside inflation risks still outweigh downside risks. This backdrop points to a narrowing interest rate differential between Brazil and the US, undermining the appeal of Brazilian carry trades and providing further support for the dollar.
