Business · Markets · 42 mins ago
Brazilian real falls sharply after Lula’s re-election
Brazil’s real fell sharply against the dollar after Luiz Inácio Lula da Silva won re-election as president.
In offshore trading on Sunday night, contracts tied to the real were down 10.17%, and the currency had lost as much as 12% at its weakest point.
Investors had been expecting the opposition candidate to win, and some had anticipated a shift toward tighter control of public spending and government debt.
Lula’s victory led investors to reassess those expectations, with concern focused on Brazil’s public finances and the lack of a majority for his government in Congress.
Analysts expected Brazilian shares to come under pressure, while the dollar and future interest rates could rise when markets opened.
Exporters with income in dollars could fare better, while retailers, builders and other companies sensitive to borrowing costs could face greater pressure.
The Brazilian real fell sharply against the US dollar after President Luiz Inácio Lula da Silva won re-election on Sunday.
At its weakest point, the real lost 12% of its value against the dollar in futures trading, according to CNN Brasil.
Other Brazilian assets also fell in overseas trading, including the EWZ exchange-traded fund tracking Brazilian shares.
Analysts said investors were concerned about the outlook for public finances and expected pressure on the currency, stocks and interest rates.
A Citibank survey found that most respondents expected the real to lose more than 5% and the Ibovespa to fall more than 5%.
- Who
- Brazil’s real and other Brazilian financial assets. Lula was re-elected president.
- What
- The real fell sharply against the US dollar after Lula’s re-election.
- When
- Sunday, October 25, 2026, during evening trading.
- Where
- In futures trading and overseas markets; the sources do not specify a single location for the real’s decline.
- Why
- Investors were concerned about continued public deficits and spending, and the outlook for fiscal policy.
This story does not have two clearly opposing sides.
In the first round of the election, Flávio Bolsonaro was ahead of Lula in the results reported by the source.
The dollar closed at R$5 for sale, down 4.12%, according to CNN Brasil.
The dollar closed at R$4.9896 for sale, down 0.97%, in the last trading session before the second round.
Lula won re-election, and Brazilian assets fell in overseas trading that evening.
Analysts expected further pressure on the real, the Ibovespa and futures interest rates.
- Real’s worst point
- Down 12% against the dollar in futures trading, according to CNN Brasil
- CME Group contracts
- Monthly BRL/USD options fell 10.17% at about 21:58 on October 25
- EWZ
- Down 18.29% in overnight trading, quoted at US$34.80, according to Estadão
- Citibank survey
- 73 fund managers were surveyed
- Ibovespa expectations
- 80% of surveyed managers expected a fall of more than 5%
- Real expectations
- 63% of surveyed managers expected the real to lose more than 5%
10 sources
Real cai 10% no mercado futuro ante dólar após reeleição de Lula
Brazil Markets Brace for Rout on Lula’s Improbable Election Win
Vitória de Lula derruba ativos brasileiros e deve reverter ganhos pré-eleitorais
Mercado indica reação negativa com eleição de Lula
Real despenca frente ao dólar após reeleição de Lula
Real futuro cai 9% e ETF do Ibovespa recua 11% após vitória de Lula
What people are saying
The market would give Flávio the benefit of the doubt. In Lula’s case, there will be no complacency. He will not get the benefit of the doubt.
The first impact should be a return of interest rates to levels before the first-round result. A rise in the dollar and a reversal of some stock-market gains are also possible.
The expectation is for a more cautious week, with the Ibovespa under pressure, the dollar higher and futures interest rates rising.