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Real Extends Rally As Softer Inflation And Steady Copom Undercut Dollar In Brazil
(MENAFN- The Rio Times) The Brazilian real strengthened for a fifth straight session on Tuesday, pushing the dollar to its weakest close since June 2024 after a cooler-than-expected inflation print and central bank minutes reinforced confidence in a prolonged period of high rates.
The dollar ended at 5.2732 reais, down 0.64 percent on the day, extending declines against both major and emerging-market currencies.
October's IPCA rose just 0.09 percent month on month, well below forecasts, easing immediate price pressures and validating a policy mix that has favored restraint over stimulus.
Minutes from the latest Copom meeting repeated that the 15 percent Selic is adequate“for a prolonged period,” a message investors read as firm stewardship rather than uncertainty.
With inflation ebbing and the committee signaling patience, markets nudged up bets that the first rate cut will arrive only in early 2026, preserving Brazil 's carry advantage and supporting the currency.
Global currents helped. Risk appetite improved as U.S. lawmakers advanced a deal to fund the government and end a record shutdown, trimming safe-haven demand for the greenback.
Real holds firm as dollar softens again
The dollar index hovered around the high-99s, slipping for a second session. Higher commodity prices added to the tailwind: Brent futures climbed roughly 1.7 percent to about $65 a barrel, aiding terms of trade for producers.
Technically, the move gathered momentum. On four-hour charts, USD/BRL has trended below short-term moving averages and the Ichimoku cloud, with momentum oscillators still stretched but not reversing.
On the daily timeframe, the pair remains capped beneath the 50- and 100-day averages; support lies near 5.26–5.24, while 5.33–5.36 now forms a resistance band. The structure favors selling rallies unless the dollar stages a broader rebound.
Behind the price action is a familiar split: investors reward credible disinflation and budget vigilance while discounting expansionary impulses that could reignite prices.
For now, Brazil's central bank is buying time, inflation is bending lower, and global risk winds are modestly favorable.
If Congress in Washington finalizes its funding deal and domestic data continue to cool, the real's advantage can persist-so long as policy signals remain anchored in discipline rather than expedience.
The dollar ended at 5.2732 reais, down 0.64 percent on the day, extending declines against both major and emerging-market currencies.
October's IPCA rose just 0.09 percent month on month, well below forecasts, easing immediate price pressures and validating a policy mix that has favored restraint over stimulus.
Minutes from the latest Copom meeting repeated that the 15 percent Selic is adequate“for a prolonged period,” a message investors read as firm stewardship rather than uncertainty.
With inflation ebbing and the committee signaling patience, markets nudged up bets that the first rate cut will arrive only in early 2026, preserving Brazil 's carry advantage and supporting the currency.
Global currents helped. Risk appetite improved as U.S. lawmakers advanced a deal to fund the government and end a record shutdown, trimming safe-haven demand for the greenback.
Real holds firm as dollar softens again
The dollar index hovered around the high-99s, slipping for a second session. Higher commodity prices added to the tailwind: Brent futures climbed roughly 1.7 percent to about $65 a barrel, aiding terms of trade for producers.
Technically, the move gathered momentum. On four-hour charts, USD/BRL has trended below short-term moving averages and the Ichimoku cloud, with momentum oscillators still stretched but not reversing.
On the daily timeframe, the pair remains capped beneath the 50- and 100-day averages; support lies near 5.26–5.24, while 5.33–5.36 now forms a resistance band. The structure favors selling rallies unless the dollar stages a broader rebound.
Behind the price action is a familiar split: investors reward credible disinflation and budget vigilance while discounting expansionary impulses that could reignite prices.
For now, Brazil's central bank is buying time, inflation is bending lower, and global risk winds are modestly favorable.
If Congress in Washington finalizes its funding deal and domestic data continue to cool, the real's advantage can persist-so long as policy signals remain anchored in discipline rather than expedience.
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