Dollar Gains Against Real amidst Fiscal Worries & Election Hype

The dollar saw a rise against the Brazilian real on October 25, 2024, despite a quiet economic calendar in Brazil and abroad. Closing at R$ 5.7051 ($1.02), the U.S. currency marked a 0.75% increase for the day.

Factors such as weak commodity prices, U.S. election anticipation, and uncertainties surrounding Brazil’s fiscal scenario influenced the dollar’s movement. Concerns persist in the market over the government’s promises to control spending.

Renato Gomes, director at the Central Bank, highlighted worrying aspects of the government’s fiscal policy, including the potential for deficits in state-owned companies and missing the zero-deficit target for 2025.

Internationally, the U.S. election is a focal point, with analysts suggesting a victory for Donald Trump could impact the Brazilian currency negatively. Trump’s economic promises may lead to higher U.S. interest rates, strengthening the dollar.

As investors monitor these developments, expectations of gradual monetary easing by the Federal Reserve could boost Treasury yields in the future, shaping currency markets globally. Stay tuned for more updates on the evolving economic landscape.