31.10.202515:12:42UTC+00Brazilian Real Pressured by USD Strength

The Brazilian real depreciated beyond 5.39 to the US dollar, principally influenced by the strengthening of the US dollar, despite favorable domestic economic indicators. The US dollar gained strength following the Federal Reserve’s 25 basis point interest rate cut, which was tempered by Chair Powell’s cautionary note that an additional rate decrease in December is not guaranteed. This statement contributed to maintaining relatively tight global funding conditions. On the domestic front, Brazil's unemployment rate remained low at 5.6% for the September quarter, bolstering consumer spending and tax revenues and lending support to arguments for a more hawkish stance by the Brazilian central bank. Nevertheless, these domestic advantages were counterbalanced by the perceived temporary nature of the US–China trade truce, as well as ongoing fiscal and policy uncertainties. These include unsuccessful congressional votes on revenue initiatives and previous adjustments to the IOF (Tax on Financial Operations) regulations, which have rendered some foreign investors wary.