The Brazilian real weakened to near 5.23 per U.S. dollar in October, broadly tracking gains by the dollar against other emerging-market currencies. The U.S. currency has been supported by expectations of further Federal Reserve tightening, while inflation pressures linked to the Middle East situation and resilient U.S. economic performance have reinforced demand for the dollar. Brazil’s approaching election is adding political risk, with recent polls pointing to a close presidential race. Meanwhile, S&P Global PMI data showed the country’s manufacturing sector suffered its sharpest deterioration in operating conditions since April 2023. Labor-market data remained compatible with gradual cooling, while expectations that gross domestic product will be near flat in 3Q26, despite strong payrolls, have kept expectations for continued Selic easing intact.