1 Real (The Real) – Brazil

In 2019, Brazil's currency, the real (BRL), experienced significant volatility and depreciation, largely influenced by a combination of domestic political uncertainty and shifting global risk sentiment. The year began with optimism following the October 2018 election of right-wing President Jair Bolsonaro, whose pro-market agenda and promised pension reform fueled a "Bolsonaro Rally." This sent the real to around BRL 3.70/USD, its strongest level in over two years, as international investors anticipated long-overdue fiscal adjustments to address the country's large public debt.

However, this strength proved fleeting. As the year progressed, political fragmentation in Congress stalled the crucial pension reform, undermining confidence in the government's ability to stabilize public finances. Concurrently, a slowdown in economic growth, exacerbated by a weaker-than-expected recovery from the 2015-2016 recession, pressured the currency. The real's trajectory was further dictated by external factors, particularly the monetary policy of the U.S. Federal Reserve. As the Fed paused its rate-hiking cycle and later cut rates, it provided some relief to emerging market currencies like the real by reducing the dollar's yield advantage.

By the end of 2019, the real had weakened considerably, closing the year near BRL 4.00/USD, a depreciation of roughly 8% from its January peak. This reflected a market reassessment of Brazil's near-term economic prospects and reform pace. Ultimately, the year highlighted the real's sensitivity to the domestic reform timetable, with its performance serving as a key barometer for investor confidence in the Bolsonaro administration's ability to deliver its economic agenda amidst a challenging political landscape.