The Brazilian real slipped beyond 5.26 against the US dollar, retreating from its peak levels since May 2024. This movement was influenced by the strengthening of the US dollar and changing global interest rate dynamics, which lessened the attractiveness of high carry currencies like the real. Globally, the dollar’s resurgence followed a decline in January and was bolstered by strong US economic data and the nomination of Kevin Warsh as the upcoming Federal Reserve Chair. These developments heightened expectations of tighter liquidity and a more disciplined balance sheet, driving up US yields and increasing the opportunity cost of holding the Brazilian real. Domestically, while Brazil’s Central Bank (Copom) has kept the Selic rate at a tight 15%, officials have emphasized that any future rate cuts will depend on continued disinflation and fiscal prudence. This stance tempers expectations for any further gains from Brazil’s already appealing real yield advantage, providing minimal new support for the currency.