Understanding the Storm in Brazilian Markets

By Bret Rosen

Worries over Brazil’s fiscal deficit and monetary policy have battered the country’s currency in 2024.

A year-to-date chart of emerging markets’ currencies shows that the weakest performance has come from the Brazilian real.  While the Mexican peso gyrated in the days after the election of Claudia Sheinbaum in early June, and other emerging market currencies such as the South African rand and Indian rupee wobbled after their own elections, it is the Brazilian currency that has performed the worst, now down 7% in just the last month. How concerned should President Luiz Inácio Lula da Silva—and investors—really be As has often happened throughout Brazilian history, fiscal worries are...

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