The Brazilian real strengthened significantly against the U.S. dollar this Friday, closing at R$5.69, its lowest level since November 7, 2024. This marked a 1.29% drop in the dollar’s value for the day and a 1.68% decline for the week.
Analysts attribute this movement to a combination of domestic and international factors, including record-low approval ratings for President Luiz Inácio Lula da Silva, statements from Brazil’s Central Bank president Gabriel Galípolo, and global market trends. A Datafolha poll released on February 14 revealed that Lula’s approval rating fell sharply from 35% in December to just 24%, the lowest of his three terms.
Disapproval surged from 34% to 41%, reflecting growing dissatisfaction among Brazilians over inflation and economic challenges. The survey also highlighted that only 33% of respondents in Lula’s stronghold, the Northeast region, rated his government positively—down from 49% in December.
Market participants reacted swiftly to this political development. The real gained momentum as investors anticipated potential shifts in fiscal and monetary policies. Meanwhile, remarks by Central Bank President Galípolo at an event in São Paulo also influenced sentiment.
Dollar Drops to R$5.69 Amid Record Low Approval for Lula
Galípolo emphasized that the impact of currency movements on inflation depends on economic activity levels and the persistence of depreciation trends. He noted that uncertainties surrounding U.S. trade tariffs under President Donald Trump have added volatility to global markets.
Globally, weaker-than-expected U.S. retail sales data contributed to a broader decline in the dollar index (DXY), which tracks the greenback against six major currencies. The DXY fell by 0.56%, providing further support for emerging-market currencies like the real.
Despite these gains, Brazil faces ongoing economic challenges. The real has depreciated significantly over the past year due to fiscal uncertainties and declining investor confidence in Lula’s administration. While Friday’s rally offers some relief, it underscores the precarious balance between domestic political pressures and global economic dynamics.
For now, markets remain cautious as they assess whether Brazil’s government can stabilize its economy while addressing public discontent. The interplay between Lula’s approval ratings, Central Bank policies, and external factors will likely continue shaping Brazil’s financial landscape in the coming months.
