Brazil’s central bank sold $17B in FX markets this week, including a record $8B in one day, to stem the real’s 20% YTD decline. The currency rebounded Friday after President Lula reaffirmed fiscal responsibility and non-interference in central bank policy. Despite these measures, fiscal concerns remain the root of market turmoil. Brazil’s budget deficit (10% of GDP) and weak spending cuts have spooked investors, triggering asset selloffs and raising inflation expectations. Analysts warn of fiscal dominance undermining monetary tightening, with the Selic rate projected to exceed 16%. #Forex #Brazil #EmergingMarkets #Inflation