MediumIV Macro Policy & Sovereign Debt15 October 2026, Thursday
Brazil's real loses 1.17% in a day as runoff polls tighten
With polls showing a dead heat ahead of Brazil's 25 October runoff, the dollar rose 1.17% to 5.087 reais on 15 October. The Ibovespa fell 1.06% to 204,324 points, its third consecutive daily decline.
In a Quaest poll published on 14 October, Flávio Bolsonaro had 46% and President Lula 44%, a gap within the ±2-point margin of error. A Datafolha poll dated 8 October put the figures at 49% to 45%. In the first round on 4 October, Bolsonaro took 47.03% and Lula 45.16%. On the evening of 15 October Polymarket gave Bolsonaro a 79.7% chance of winning; this is a betting price, not a poll.
The real had strengthened after the first round. The PTAX rate fell from 5.2238 on 2 October to 4.9859 on 5 October, a drop of 4.6%. According to The Rio Times, CNN Brasil and Suno attributed the 15 October sell-off to the polls and to Senate approval of a proposal abolishing the six-days-on, one-day-off work schedule. August retail sales rising only 0.1% against expectations of 0.7% added to the pressure; the exact cause of the decline could not be verified. The Ibovespa fell to 2.3% below its record close of 209,066.90 points on 9 October.
The IBC-Br, the central bank's leading indicator of GDP, released on 16 October, rose 0.3% month on month in August. It contracted 0.6%, however, against the quarter ending in May. On the morning of 16 October Polymarket put the probability of a quarter-point rate cut at the 3–4 November Copom meeting at 83.5%. According to a Goldman Sachs estimate cited by Latin Times, the fiscal risk premium in the real stands at about 5.3%.
Talay assessment
Bottom line
After the first round the real had priced in a Bolsonaro victory and expectations of fiscal discipline; polls turning into a dead heat are unwinding that premium. Until 25 October the currency will stay sensitive to polls and to the fiscal cost of the work-schedule proposal passed by the Senate. The 0.6% quarterly contraction gives the central bank room to cut, but that room narrows if the currency weakens.
Likely effects
- Brazilian realNegativeWeeks
Part of the 4.6% appreciation after the first round has been given back; the currency will be repriced with every poll until 25 October.
- Brazil's rate pathUncertain1–6 months
The 0.6% quarterly contraction supports a November cut, while a weaker real could limit the pace of easing.
- Emerging marketsUncertainWeeks
Brazil's election premium makes carry trades in high-yielding emerging-market currencies more selective; foreign interest in the lira is also affected by that selectivity.
Possibilities, ranked
- 1Volatile currency until the vote55%
Polls stay within the margin of error and the dollar/real fluctuates in the 5.00–5.27 range.
Watch: The final Datafolha and Quaest polls and the 5.10 level on dollar/real
- 2Bolsonaro widens his lead30%
The gap grows in the final polls, the fiscal premium narrows again and the real recovers.
Watch: Dollar/real falling below 5.00
- 3Lula moves ahead15%
Polls put Lula in front, the fiscal risk premium grows and the currency weakens sharply.
Watch: Dollar/real closing a day above the 5.27 resistance
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Dollar/real▼ +1.17%
- Ibovespa▼ −1.06%