Brazilian real futures fell 9.97% in overseas trading after President Luiz Inácio Lula da Silva won Brazil’s presidential runoff, sharpening attention on his fiscal agenda and the balance of power in Congress.
Brazil’s Superior Electoral Court (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%, after leading in the first round.
At 9:30 p.m. ET Sunday (01:30 UTC Monday), UOL reported that the November 2026 real futures contract on the Chicago Mercantile Exchange was down 9.97%, implying a rate of R$5.56 per U.S. dollar. The Tokyo-listed NEXT FUNDS Ibovespa Linked ETF was down 14.37% at 280 yen 10 minutes later, UOL said. The futures indication was not a rate from Brazil’s domestic spot currency market.
Reuters put the real’s gain against the dollar at almost 5% from before the first round through Friday. Brazilian stocks rose nearly 7% over that period, it reported. The currency had held much of its initial gain by Oct. 19.
FXStreet reported that Deutsche Bank strategists viewed the earlier rally as a sign that investors had increasingly expected Bolsonaro to win. The strategists said the new Congress may restrict Lula’s room to loosen fiscal policy, making his budget approach a key issue for Brazilian assets.
The Senate projects Partido Liberal (PL) to hold 29 of its 81 seats in 2027, more than any other party. A Senate report citing Chamber of Deputies figures said PL won 121 of 513 seats, giving it the largest party bloc in the lower house.
Public debt exceeds 82% of gross domestic product, Reuters reported. Lula’s team is seeking a primary budget surplus of about 1.3% of GDP by 2030, the outlet said. Reuters also reported that lenders may demand higher interest rates if they lack confidence in the government’s fiscal plans, raising borrowing costs for businesses and households.
Reuters cited Divya Singaravelu, head of research at Meridian 1305 Capital, as identifying the 2027 budget and spending cap, along with Lula’s choice of finance minister, as early signals of the administration’s fiscal direction.
