Brown Brothers Harriman says Brazil’s rising debt and the market shift after President Luiz Inácio Lula da Silva’s reelection could pressure the Brazilian real in the near term.
The firm linked that risk to investors reversing positions built on a Bolsonaro victory. Before the runoff, BBH had warned that a Lula win could lead to a sharper selloff in the real. Its Oct. 26 note also pointed to factors that might support the currency over time. Elias Haddad, the firm’s vice president and global head of markets strategy, said Lula may need centrist backing in a conservative Congress, which BBH expects could restrain fiscal expansion. Haddad also cited Brazil’s high yields and exposure to commodities linked to energy, artificial intelligence and defense as possible support for the real.
The Superior Electoral Court (TSE) said Lula received 64,256,232 votes, or 51.79% of valid votes, in the Oct. 25 runoff. Sen. Flávio Bolsonaro received 59,826,041 votes, or 48.21%, after leading the Oct. 4 first round. A TSE update on Oct. 5, with 99.99% of ballot boxes counted, showed Bolsonaro at 47.03% and Lula at 45.16%.
Amid a sharp decline Monday, exchange operator B3 suspended covered cash-market trading for 30 minutes. It also lifted the daily ceiling on U.S. dollar futures movements from 8.4% to 12% for that session. EconoTimes also covered the fall in Brazilian real futures.
The Central Bank of Brazil (BCB) reported gross general-government debt at 82.9% of GDP in August 2026, or R$11.1 trillion, up 0.3 percentage point from July. A Federal Court of Accounts (TCU) record gives the ratio as 71.7% at the end of 2022. The BCB set its Selic target at 13.75% a year, effective Sept. 17.
B3’s notice lists the 1999 real devaluation among earlier episodes linked to a market-wide trading halt. The BCB is scheduled to publish its September fiscal statistics on Friday, Oct. 30.
