Dollar Dips for Seventh Straight Day Following US and Brazil Interest Rate Decisions

The US dollar continued its downward trend for the seventh consecutive trading day. This decline followed the market’s reaction to interest rate decisions in the United States and Brazil.

The greenback closed at R$ 5.42427 against the Brazilian real, marking a 0.69% decrease on Thursday. This performance stood out from the global trend.

The DXY index, which measures the dollar against six major currencies, closed slightly higher by 0.04%. The domestic market responded to the Brazilian Central Bank‘s more aggressive tone in its interest rate decision statement.

On Wednesday, the Monetary Policy Committee unanimously raised the Selic rate by 25 basis points to 10.75% per year. This move kicked off a ‘mini-cycle’ of monetary tightening.

The committee cited resilient economic activity, labor market pressures, and rising inflation projections as reasons for a more restrictive policy.

Financial agents now expect a 50 basis point increase in the Selic rate at the November meeting. Additionally, rising commodity prices have boosted emerging market currencies like the real.

In contrast, the United States is moving in the opposite direction with interest rates. The Federal Reserve cut interest rates by 0.50 percentage points to a range of 4.75% to 5.00%.

This reduction, the first since March 2020, aligns with market expectations and marks the beginning of monetary easing in the world’s largest economy. As the Fed continues to lower rates, the dollar becomes less attractive.

Lower Treasury yields generate an appetite for riskier markets with higher interest rates, such as Brazil. This shift in global monetary policy is reshaping currency dynamics and investment flows.

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.