FX.co ★ Brazilian Real Near 11-Week Low

The Brazilian real has weakened beyond 5.9 against the USD, nearing the eleven-week low of 6.01 recorded on April 8th. This weakening is largely attributed to the persisting trade tensions between the U.S. and China, characterized by escalating tariffs, notably the significant 145% tariffs on Chinese imports. These developments have heightened global economic uncertainty, negatively affecting investor sentiment towards emerging markets. The apprehensions about a global economic slowdown have led to a drop in commodity prices, including oil, thereby decreasing export revenues and placing additional pressure on Brazil’s economy, which heavily relies on these exports. Domestically, the uncertainties surrounding fiscal policies and doubts regarding the government's capability to manage its finances are escalating risks related to increasing debt and inflation. These domestic challenges, coupled with inflation expectations exceeding target levels, exacerbate concerns about the country's economic outlook.