FX.co ★ Brazilian Real Slides as Labor Market Weakens and Trade Risks Mount

The Brazilian real recently experienced a depreciation, exceeding the 5.75 mark against the USD. This comes after it reached its strongest point since November 2024 at 5.65 on March 19th. The shift indicates challenges in Brazil's economic outlook, primarily due to a softening labor market and increasing trade tensions. Unemployment rose to 6.8% in the three-month span ending in February, up from 6.5% in January. This reflects a deceleration in private-sector job creation and a growing dependency on jobs within public administration. These developments have sparked concerns about domestic demand and the broader durability of the economy. Global trade uncertainties have compounded the situation, following U.S. President Trump's announcement of a 25% tariff on automobile imports and the possibility of broader tariff actions, which heighten fears of export interruptions and increased costs for Brazilian companies. Additional pressure is mounted by the Central Bank's latest Monetary Policy Report, which reduced the GDP growth forecast for 2025 to 1.9%. The report also recognized inflationary pressures exceeding the 3% target through the following year, thus reinforcing the anticipation of a more gradual approach to reducing interest rates.