US dollar falls 4.43% against Brazilian real in historic drop

The US dollar fell 0.79% on October 9, 2026, to finish the trading session at 4.9845 Brazilian reais. Across the week, the currency dropped 4.43% from 5.21 reais on the prior Friday to 4.98 reais, registering its largest post-first-round presidential election slide against the real since the currency was established in 1994. In 2022, the dollar had dropped 3.36% in the week after the first round.

In the same session, the commercial euro fell 0.92% to 5.5821 reais, while the US Dollar Index rose 0.09% to 102.227 points. The Brazilian real recorded the second-best performance among the 33 most liquid currencies globally, trailing only the Colombian peso. Financial agents reduced the risk premium on Brazilian assets amid expectations surrounding Senator Flávio Bolsonaro in the presidential race.

William Jackson, chief emerging markets economist at Capital Economics, stated that based on historical election metrics and asset movements, most positive news appears to be priced into foreign exchange and equities. Mark McCormick, chief currency strategist at BMO Capital Markets, recommended caution in the short term, citing fiscal hurdles such as constitutional indexation, mandatory protected transfers, and limited room for discretionary spending cuts. McCormick also highlighted rising oil prices, food price shocks tied to El Niño, and wage pressures on inflation, forecasting the dollar could climb back above 5.10 reais before year-end.

Traders noted corporate outflows as local companies used lower rates for remittances, freight, and imports. The spread between the onshore dollar forward rate and the effective fed funds rate widened from above 1.3 percentage points at the turn of the month to between 1.6 and 1.7 points, leading traders to see potential for the Central Bank of Brazil to inject liquidity through credit auctions or foreign-exchange swap lines.