The Brazilian real dropped against the US dollar today as market participants were skeptical about the ability of President Dilma Rousseff to push for the planned austerity measures. Uncertainty about the upcoming policy meeting of the US Federal Reserve also affected the currency negatively.
The real demonstrated its biggest daily gain in a month during the Monday’s trading session amid hopes that Rousseff will be able to convince the Congress in necessity of tax increases and budget cuts. Yet today investors speculate that perhaps the President lacks political power needed to push for austerity. This, coupled with concerns about the potential monetary tightening from the Fed, made the Brazilian currency not particularly appealing to Forex traders.
USD/BRL gained from 3.8335 to 3.8554 as of 19:51 GMT today.
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