Breaking: the Brazilian real suffered its sharpest fall since 1999 after Lula won the presidential runoff in an upset. USD/BRL surged as high as 5.605, about +12% from Friday’s close, Brazilian stocks fell so hard that the B3 exchange halted trading, and the Treasury cancelled its bond auctions for the week.
Updated Mon 26 Oct 2026 · 16:20 GMT · Prices in this article as of around 15:15 GMT (12:15 Brasília time). Prices may change quickly.
In the Brazilian morning USD/BRL peaked at 5.605 (+12.25%) before pulling back.
Key points
- 1Lula won the runoff 51.79% to 48.21% over Flávio Bolsonaro, whom markets had expected to win. The Bolsonaro camp has not accepted the result and will ask the electoral court to annul it.
- 2USD/BRL opened at 5.425 (+8.65%) and peaked at 5.605 (+12.25%) from Friday’s close of 4.993. MercoPress, citing El País, says it is the real’s steepest fall since 1999.
- 3The Ibovespa fell 10% at the open, prompting B3 to halt trading for 30 minutes. Around 12:15 Brasília time it was still down 15.11% at 174,093.76. The Treasury cancelled its 27–29 Oct bond auctions.
Affected assets
USD/BRL and Ibovespa from Seu Dinheiro around 12:15 Brasília time (15:15 GMT) vs Friday’s close · DI Jan 2028 from CNN Brasil in the morning (around 10:40–11:00 Brasília time) · ▲ USD/BRL = weaker real
Lula’s upset win sparks an immediate sell-off in Brazil
In Brazil’s presidential runoff on Sunday 25 Oct, the electoral court (TSE) said Luiz Inácio Lula da Silva won 51.79% against Flávio Bolsonaro’s 48.21%, giving Lula a fourth term. The result ran against how markets were positioned: an earlier Citi survey of 73 fund managers found 80% expected markets to fall more than 5% if Lula won.
When markets opened on Monday, USD/BRL opened at 5.425, up 8.65% from Friday’s close of 4.993, and reached 5.605 (+12.25%) at 9:47 Brasília time (12:47 GMT), according to FinanceFeeds. The Ibovespa fell more than 10%, triggering a 30-minute circuit breaker on B3 for the first time since the 2020 Covid crash. Around midday Brazilian time, Seu Dinheiro reported the dollar at 5.4299 (+8.63%) and the Ibovespa at 174,093.76 (−15.11%).
Why markets are worried about Brazil’s finances
Many investors had bought Brazilian assets in advance, betting Bolsonaro would win and run tighter fiscal policy. When the result went the other way, those positions were unwound at once. MercoPress quotes an Aberdeen analyst saying investors want a new fiscal framework that delivers a primary surplus large enough to stabilise debt, with Brazil’s public debt already above 80% of GDP.
The selling spread to rates. CNN Brasil reported the January 2028 DI rate future up 206bp at 14.915% and the January 2035 contract up 263bp, prompting Brazil’s Treasury to cancel bond auctions scheduled for 27–29 Oct. At the time of writing there were no reports of the Central Bank of Brazil (BCB) intervening in the currency market.
What to watch next
First, whether the central bank intervenes in the FX market and whether it resumes hiking the Selic rate from 13.75%. Second, the Bolsonaro camp’s bid to annul the election, which could prolong uncertainty. Major currency pairs have not been clearly affected yet, but if selling spreads to other emerging-market currencies, the dollar could gain further support.
This week also brings major central bank meetings from the Fed, ECB and BoJ. Release times are in the economic calendar, the latest policy rates on our central bank rates page, and this morning’s market overview in Forex News 26 Oct.
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Sources (7)
- MercoPress – Brazil’s real plunges more than 8% (26 Oct)
- FinanceFeeds – Brazilian Real falls 12% to R$5.60 (26 Oct)
- Seu Dinheiro – Ibovespa cai 17% (26 Oct, 12:29 Brasília time)
- CNN Brasil – Ibovespa despenca 16% (26 Oct)
- Bloomberg – Brazil Markets Crater After Lula Victory (26 Oct)
- CNBC – Lula wins historic fourth term (26 Oct)
- FXStreet – Brazilian Real: Election shock (SocGen, 26 Oct)
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