The Brazilian real continued to strengthen against the US dollar today thanks to increased investor confidence domestically and an easing in the dollar globally in recent days after the real tumbled in the last weeks of 2024 on fiscal concerns.
The exchange rate ended the session at R5.946/$1, as the real appreciated by 1.4pc on the day. The real has strengthened by about 7.8pc to the dollar from an intradday low of R6.4/$1 on 25 December. The last time the exchange rate between the two currencies ended the day below the R6/$1 threshold was on 11 December, when it stood at R5.989/$1.
The real's recent appreciation took place as domestic investors are more confident about the country's spending cut plans, according to Sidney Lima, an analyst at Ouro Preto Investimentos, an investment management firm.
But it is hard to say whether the recent appreciating trend will continue in the future, he said. That will "depend on the continuity of fiscal reforms in Brazil and global economic conditions," he added.
At the same time, the US dollar index, which tracks the dollar against six main trading partner currencies, has fallen from a more-than two-year high on 12 January on uncertainty over whether US president Donald Trump will follow through on his tariff threats.
Still, the Brazilian real has depreciated by around 20pc to US dollar since 22 January 2024.