Brazil’s currency dipped under four reals to the dollar for the first time in five weeks at close on Thursday as the markets reacted favorably to the emergence of two clear presidential election frontrunners.
The real closed at 3.99 just two weeks after hitting a record low of almost 4.2 to the dollar — it’s lost around 17 percent of its value since the start of the year.
But with right-wing candidate Jair Bolsonaro and leftist Fernando Haddad streaking clear of their rivals in opinion polls on the final straight of an election campaign that has swung between the unpredictable and surreal, Brazil’s currency has received a boost.
“The candidate seen as pro-reform has consolidated himself in first place in the polls and that’s something the market views positively,” Renata Guedes, a consultant at Walpires brokers, said of Bolsonaro, who has adopted a liberal economic policy.
Even Workers’ Party candidate Haddad has softened his discourse on economic matters, displaying greater flexibility.
Bolsonaro led the latest polls with 27 percent of voting intentions to 21 for Haddad ahead of the October 7 first round of elections.
Those two are expected to go head-to-head in a second round run-off three weeks later.
The strengthening real is welcome news in a country mired in crippling debt, with feeble growth and 13 million unemployed.