The Brazilian real strengthened past 5.4 per US dollar in September, the strongest since June 2024, as clearer prospects of Fed easing drove dollar weakness while still-generous domestic interest rates and improving inflation dynamics attracted foreign capital. Externally, a run of softer US labour and price data, including large downward payroll revisions and weaker wholesale/producer inflation, pushed US yields and the dollar lower, removing the main external headwind. Domestically, August’s 5.13% inflation surprised to the downside, signaling decelerating headline inflation and trimming the inflation risk premium. That disinflationary impulse, together with a still-high Selic at 15%, keeps Brazil’s interest-rate differentials attractive. Elsewhere, political headline risk from the Bolsonaro trial remains a potential source of volatility but has so far been outweighed by the global funding pivot and the improving domestic inflation picture.