ING sees uneven risks for Brazil’s real in the Oct. 25 presidential runoff, forecasting a lower dollar exchange rate under a Bolsonaro win and a potentially larger rise under a Lula win.
In an Oct. 20 research note, ING global head of markets Chris Turner said the dollar could fall to 4.85–4.90 reais in the first trading session after a victory by Sen. Flávio Bolsonaro over President Luiz Inácio Lula da Silva. He saw a potentially larger upward move in the dollar exchange rate if Lula wins, but gave no target for that outcome. Both are forecasts, not observed prices.
Turner put the dollar at about 5.05 reais when he wrote, compared with ING’s observation of 4.95 after the first round. The change reflects a partial reversal of the real’s gain after the first-round vote. A lower dollar exchange rate means fewer reais are needed to buy $1.
Brazil’s Superior Electoral Court reported that Bolsonaro received 47.03% of valid first-round votes and Lula 45.16%, with 99.99% of ballot boxes counted. A Datafolha survey of 2,520 voters conducted Oct. 13–14 put Bolsonaro at 51% and Lula at 49% of valid intended votes. The difference was within the survey’s 2-percentage-point margin of error.
Turner raised a workweek change as a possible factor in Lula’s support. Datafolha said its interviews ended before the Senate approved the measure on Oct. 14, so that survey cannot establish an effect from the vote. The constitutional amendment, published Oct. 16, provides for two paid rest days a week without a pay cut. It lowers the maximum workweek from 44 to 42 hours two months after publication, then to 40 hours one year later. The Senate cited a Labor Ministry estimate that about 14.9 million people working six-day schedules stand to benefit.
TV Globo has scheduled a debate for Oct. 23. The electoral court has set runoff voting for Oct. 25, from 7 a.m. to 4 p.m. ET (8 a.m. to 5 p.m. Brasília time).
