Brazilian Dollar Slides to R$5.1065, Lowest Since August

The Brazilian real closed at R$5.1065 on September 2, marking its lowest closing rate since August 7, when it settled at R$5.0845. The spot dollar fell 0.91% in the session, extending a three-session decline of 1.72% and a year-to-date drop of 6.97%. Intraday trading saw the currency range between R$5.0984 and R$5.1702, with the highest intraday point of R$5.1702 (+0.33%) occurring at 10:15 and the lowest at R$5.0984 (-1.07%) at 13:20. The October futures contract on B3 also fell 0.96% to R$5.1380 by 17:03. Meanwhile, the US Dollar Index (DXY) declined 0.13% to 99.548, reflecting broader dollar weakness. The Central Bank of Brazil sold 50,000 swap contracts in late morning operations for the October rollover, amid ongoing liquidity management efforts. August’s foreign exchange flows registered a net outflow of US$3.095 billion, further straining reserves. A median forecast from 26 strategists, surveyed between August 31 and September 2, projected the real to reach R$5.23 in one year, indicating persistent uncertainty over Brazil’s economic outlook. Brent crude oil rose to above US$95 per barrel during the session, offsetting some dollar weakness. Geopolitical tensions also played a role, with US forces launching strikes in Iran’s southern coast, prompting retaliatory fire on US bases across the Middle East—the largest direct confrontation since July. The conflict heightened regional instability and risk aversion, contributing to the real’s decline. Meanwhile, Brazil’s presidential election campaign intensified, with voting intentions narrowing between incumbent President Luiz Inácio Lula da Silva (PT) at 42% and Senator Flávio Bolsonaro (PL-RJ) at 41%, a margin of error of ±2 percentage points. In first-round polling, Lula led at 37%, followed by Bolsonaro at 29%, with Augusto Cury (Avante) at 10%. Lula’s campaign also advanced a work schedule bill to end the 6x1 workweek, approved by the Senate’s Constitution and Justice Commission and sent to plenary for final approval. Analysts noted that foreign investors remain cautiously optimistic about Brazil’s market, despite political uncertainty, with a preference for candidates perceived as more fiscally disciplined than Lula. The real’s performance reflects broader macroeconomic pressures, including tighter liquidity, geopolitical risks, and evolving election dynamics.