The Brazilian currency dipped under four Real to the dollar for the first time in five weeks at close on Thursday as the markets reacted favorably to the emergence of two clear presidential election frontrunners. The Real closed at 3.99 to the US dollar just two weeks after hitting a record low of almost 4.2 to the dollar -- it's lost around 17% since the start of the year.
Brazil's benchmark Bovespa index rose 1.75% on Tuesday, rallying for a second straight day largely on a spike in commodities prices. Two of the Bovespa's most heavily weighted equities, miner Vale and oil giant Petrobras benefited from rising commodity prices worldwide amid escalating China-U.S. trade tensions and signals OPEC is not prepared to raise output to address shrinking supplies from Iran.
In Brazil, the Real currency and benchmark Bovespa stock index strengthened slightly on Wednesday. Political uncertainty in Brazil took a toll after judicial authorities canceled the release of a closely-watched opinion poll on technical grounds.
The economic and foreign exchange crisis in Argentina and the growing uncertainties in the political scenario of Brazil ahead of October's presidential election also had an impact in the Brazilian currency and markets, forcing the Central bank to come out with a US$ 1.5bn support.
Brazil's unemployment rate dipped slightly in July, as expected, extending a slow and bumpy labor market recovery as pivotal presidential elections loom.
The Brazilian Real led losses in Latin America as lingering concerns over presidential elections overshadowed a largely positive environment for emerging market assets. The US dollar ended trading at 4.333 Reales.