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08.04.202615:00:41UTC+00Brazilian Real Rockets to May 2024 Highs

The Brazilian real strengthened to 5.1 per USD, its highest level since May 2024, as global risk appetite improved following a two-week ceasefire agreement between the United States and Iran. The currency’s appreciation was underpinned by a sharp pullback in the US dollar after President Trump postponed infrastructure strikes to allow Pakistani-led negotiations to proceed. A steep decline in crude oil prices eased immediate inflationary pressures in global markets but also softened the recent commodity-driven support for key Brazilian exports such as sugar and soybeans. Despite the drop in energy costs, the Central Bank of Brazil has maintained a hawkish stance, with real interest rates remaining among the highest in the world in order to prevent inflation expectations from becoming unanchored. Investors are now turning their attention to Friday’s US inflation data to assess whether the current bout of dollar weakness will endure or if the real will come under renewed pressure from a shifting interest rate differential.

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