The Brazilian real traded near 5.17 per USD in June, strengthening slightly toward the end of the month amid a broader pullback in the US dollar. Softer-than-expected US PCE data eased concerns over additional Federal Reserve tightening, pushing Treasury yields lower and weighing on the dollar against major and emerging market currencies. In Brazil, the BCB’s updated Monetary Policy Report raised the probability of inflation breaching the upper bound of the target range, despite June’s softer-than-expected mid-month inflation reading. Still, the interest rate differential remained supportive for the real, with Brazil’s benchmark Selic at 14.25% compared with the US policy range of 3.50%-3.75%. That wide spread has continued to attract foreign inflows and provide support to the Brazilian currency.