Dollar Drops Below R$5 as Real Strengthens on Election‑Driven Rally

Banks say the real could strengthen further if the second round confirms current political expectations with oil prices remaining supportive

Overview

The US dollar closed around R$4.97 on Tuesday, marking its weakest finish since late May and extending a market rally that followed Flávio Bolsonaro’s first‑round showing.
Intraday moves showed the spot dollar fell about 0.51% and hit a low near R$4.9444 as the DXY index eased and emerging‑market currencies gained.
UBS BB projects a conditional path toward R$4.50–R$4.60 in three to six months and Morgan Stanley sees roughly 10% upside for the real if the second round reinforces current expectations and oil stays favorable.
Analysts caution that US inflation or a Fed rate move could push the dollar back up, and they recommend retail buyers use gradual purchases to reduce timing risk when buying foreign currency.
Practical costs remain: the federal government unified IOF at 3.5% last July and banks charge a spread that typically makes tourism and credit‑card rates higher than the commercial quote (example: R$4.97 commercial vs R$5.17 tourism).