04.11.202515:07:36UTC+00Brazilian Real Loses Ground

The Brazilian real depreciated beyond 5.38 against the US dollar, influenced by the likelihood of earlier interest rate reductions by Brazil's central bank coupled with increased fiscal uncertainty, while the US dollar gained strength. Finance Minister Haddad has been vocally advocating for reduced rates, critiquing the current 10% real rates as unreasonable and forecasting inflation to close the year at approximately 4.55%. This scenario has heightened the chances of monetary policy easing earlier than anticipated, therefore reducing Brazil's interest rate gap. Such moves could heighten political pressure on the Central Bank and increase the risk premium required by investors holding Brazilian assets, especially as discussions on fiscal measures continue in Congress. Concurrently, the US dollar hit a high unseen since May, driven by the Federal Reserve's recent hawkish indications, which have diminished prospects for a rate cut in December.