The Brazilian real weakened past 6.1 per USD, retreating from a near one-month high of 6.04 seen on January 9th, driven by rising domestic inflationary pressures, fiscal uncertainties, and a stronger U.S. dollar. Brazil's annual inflation rate for December 2024 held at 4.83%, slightly down from November's 4.87%, remaining above the target ceiling. This has fueled expectations of further interest rate hikes by the central bank, dampening investor sentiment amid ongoing fiscal concerns. Simultaneously, stronger-than-expected U.S. jobs data has reinforced the Federal Reserve's cautious approach to rate cuts, boosting the U.S. dollar. Additionally, fears of reduced Brazilian export demand have intensified following U.S. President-elect Trump's proposal for national economic emergency tariffs. This is particularly concerning for Brazil's commodity exporters, already facing declining demand from China, which further weakens demand for the real.
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