The Brazilian real weakened to around 5.05 per USD, retreating from the near five‑month high of 4.98 reached on October 5th, as investors reassessed the odds that fiscally conservative candidate Flávio Bolsonaro will win the presidential runoff later this month. New polls indicated that Bolsonaro’s lead over President Lula has narrowed.
Brazilian assets had rallied last week after the senator unexpectedly outpaced Lula in the first round of voting. Although Bolsonaro has not yet outlined detailed policy proposals, markets generally view him as more likely to implement fiscal reforms, including spending cuts, which are considered crucial for bringing down interest rates.
At the same time, questions persist about the potential fiscal discipline of a Flávio administration. Political pressures have already led Bolsonaro to reverse his stance and support abolishing the six‑days‑on, one‑day‑off work schedule, a measure approved by the Senate yesterday.
