The Long View
We could have listed fifteen or even twenty key takeaways from last week as the relentless news flow makes it hard to keep up with developments both locally and globally. The significance of the past ten days in geopolitics cannot be overstated, as the U.S. administration appears to be aligning with - or at least engaging in dialogue with Russia, while sidelining Ukraine. Whether this is a strategic curveball from Donald Trump that could unexpectedly lead to a better deal for Ukraine, or simply a wake-up call for European defense spending, remains to be seen. But hoping for a favourable outcome feels a lot like cheering for a bottom-ranked team to win the league—miracles can happen, but the odds aren’t great.
This week sees a lot of important data both here?and in the US (see above) and this will definitely bring some?BRL movement. The USD has weakened against most major currencies and although the BRL has strengthened a lot this year, you never know how much upside is left. Interestingly, the latest central bank survey shows participants lowering year end forecast from 6.00 to 5.99. Whilst its a small?move, it maybe symbolic of a short term feeling that a USD/BRL?exchange rate of over 6 was maybe not?reflective of the?local scenario, and more a fear of what could come should the fiscal trajectory continue to be negative.?
IPCA inflation, due Tuesday, may show a reading of over 1% which brings inflation estimates for 2025 to 5.65%. If?economic data continues to deteriorate it may well give the central bank pause for thought. While another 1% increase is widely expected for the March 19th meeting, if January payrolls come in lower and the unemployment rate rises,?it may shorten the tightening cycle.
What should be a concern is if, and when, Brazil comes into the Trump firing line.?Trump Media & Technology Group?and Rumble have filed a?lawsuit in a U.S. federal court against Brazilian Supreme Court Justice Alexandre de Moraes, accusing him of overstepping his authority by ordering the suspension of U.S.-based accounts linked to right-wing Brazilian commentators. The companies argue that these actions violate free speech rights protected under U.S. law and set a dangerous precedent for foreign censorship. In response, de Moraes ordered the suspension of Rumble’s operations in Brazil for non-compliance, escalating tensions between Brazil’s judiciary and global digital platforms. It is no secret that Elon Musk does not like de Moraes, and?Trump is a supporter of Bolsonaro, so what this may do for US-Brazil diplomatic and trade relations is not yet clear.?Regardless of the outcome, Trump's past grudges are already reshaping foreign policy, with Ukrainian President Zelensky increasingly pushed to the sidelines.?If Brazil were to face higher US?tariffs?alongside a slowing economy and rising inflation, a return to USD/BRL 6 to 1?could be just around the corner.?
Ultimately, this case is more than a legal dispute, it is a test of sovereignty, digital governance, and the limits of judicial power in an?interconnected world. Judicial overreach and censorship has been an issue for awhile in Brazil and the related power that the Supreme Court seems to exert concerns some observers. Should a judge have the power to enforce rulings that extend its own territory? Will Musk and Trump punish Brazil via tariffs and political interference?
To say we are living in uncertain times is putting it mildly, however, regardless of the national or global political backdrop, individuals and investors need to stay focused. We cannot emphasize enough how important it is to make sure you take advantage of exchange rate movements that turn in your favour.?