Brazil's November dollar futures rose 9.16% early Monday after President Luiz Inácio Lula da Silva won reelection, bringing the currency market and the country's fiscal outlook into focus.
The contract traded at 5.430 reais at 8:11 a.m. ET (12:11 UTC), Reuters reported. Spot currency trading had not begun when Reuters reported that futures quote.
Brazil's electoral court, the Tribunal Superior Eleitoral (TSE), said Lula received 64,256,232 votes, or 51.79% of valid ballots, in the Oct. 25 runoff. Sen. Flávio Bolsonaro received 59,826,041 votes, or 48.21%.
Bolsonaro had led Lula by 47.03% to 45.16% in the court's first-round count, with 99.99% of ballot boxes tallied. The real had retained much of its gain after that vote by Oct. 19, as EconoTimes reported before the runoff.
ING strategist Chris Turner said investors had hoped a Bolsonaro presidency would bring tighter fiscal policy, a prospect that had supported Brazilian assets. Turner identified public finances as a longstanding weakness for Brazil. His assessment describes investors' expectations; it is not a measure of where the real traded Monday.
FXStreet reported that Societe Generale identified 5.20 and 5.24 as resistance levels for USD/BRL, the dollar's exchange rate against the real. It described 5.31 and 5.39 as further projections. FXStreet also reported the bank's warning that an unwind of bets on a stronger real could add pressure in the coming days.
B3 raised the upper daily movement limit for dollar and mini-dollar futures from 8.4% to 12% for Monday's session. The exchange separately said an Ibovespa-based circuit breaker suspended trading for 30 minutes in options, private fixed income and specified cash-market assets.
The Central Bank of Brazil's Selic target rate stands at 13.75% annually. FXStreet reported Societe Generale's forecast that it would end 2027 at 12.25%; that figure is the bank's projection, not a central bank decision. The central bank's next policy meetings are scheduled for Nov. 3–4.
