Brazil’s central bank made another intervention on the final trading day of the year to stabilize the real, which has plunged nearly 22% against the U.S. dollar in 2024 — the worst performance among 31 major currencies tracked by Bloomberg. Despite spending $20 billion in reserves this month, including $1.8 billion in spot sales on Monday, the currency remains under pressure, reflecting investor skepticism over President Luiz Inácio Lula da Silva’s ability to address Brazil’s ballooning budget deficit, now at 10% of GDP. The selloff has spread across markets, with bond yields hitting their highest levels since 2016 and the Ibovespa ranking among the worst-performing equity indexes globally. Analysts caution that without meaningful fiscal reforms, the real may weaken further, with projections of a 13% drop by early 2026.
The falling real has nearly offset weaker U.S. prices. While U.S. soybean prices are down nearly 25% in the past year, soybeans priced in the real are down just 5% due to the relative dollar strength. That incentivizes Brazilian soybean production.
