The Brazilian real weakened past 5.45 per US dollar to eight-week lows as uncertainty over the timing of Brazil’s rate cuts, the political shock to fiscal credibility, and more attractive foreign yields pressured the currency. November headline inflation eased to 4.46% annually, the lowest since September 2024, improving the path toward future cuts but not enough to ensure them, keeping Copom on track to hold at 15% and leaving traders debating how soon easing will begin. Political risk has also resurfaced after the return of “Flavio Bolsonaro risk” alongside congressional efforts to reduce sentences for those involved in January 8, reigniting doubts about the sustainability of a market friendly opposition and the broader fiscal outlook. At the same time US Treasury yields remain elevated, raising the opportunity cost of holding reais just as markets struggle to gauge the pace of Fed easing, making flows into high yielding emerging markets riskier.