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Brazilian Real gains on runoff outlook despite ongoing election risk

OCBC strategists said the Real could extend its rise if runoff polls keep shifting in Flávio Bolsonaro’s favor, but they expect volatility to persist.

Reported · Written up by our desk · EM Currencies

OCBC strategists at FXStreet said Brazilian assets rallied after Flávio Bolsonaro delivered a stronger-than-expected first-round result, lifting expectations for a more market-friendly policy mix.

They noted that Bolsonaro secured 47.1% of valid votes, ahead of President Lula’s 45.0%, which overturned pre-election expectations that pointed to a modest Lula lead.

The strategists said the Brazilian Real could extend its gains if runoff polls ahead of the 25 October vote continue to favor Bolsonaro, but they cautioned that election uncertainty will likely keep BRL volatility elevated.

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