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The week was marked by a significant appreciation of our currency, largely driven by an attractive interest rate differential. Furthermore, the perception of an improving international geopolitical environment helped boost investor risk appetite. Finally, it is worth noting that the price trends of certain commodities played a key role in the positive performance of several emerging market currencies, especially the real. As a result, our currency was one of the top performers over the past two weeks. Regardless, it is still too early to call this a trend, as the year is only just beginning.

The yield curve followed the same trend, showing a reduction in premiums across almost all maturities. The January IPCA-15, which came in slightly below expectations, and the Central Bank's signal that the Selic rate-cutting cycle should begin at the next meeting were fundamental to this movement in interest rates. Despite this, rates remain in the double digits, reinforcing the view that the decline in Brazilian interest rates will likely be slow and gradual.


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