Lula's Win Pushes Brazil Real to 15-Month Low, Compressing EWZ

Global investors holding the primary US-listed exchange-traded fund for Brazilian equities are watching their returns erode as a rapid currency slide offsets local stock market gains. The MSCI Brazil ETF (EWZ) faced immediate pressure as the exchange rate for the US dollar to the Brazilian Real climbed over 2.8% in a week to close at 5.6687 on November 13, 2026, according to spot market data compiled by Wise, marking the real's weakest level since July 2025. This currency depreciation directly compresses the dollar-denominated value of Brazilian assets held by international portfolios.

What happened to Lula in Brazil?

The currency's sharp depreciation has been accelerated by domestic fiscal worries following President Luiz Inácio Lula da Silva’s narrow victory in the October 25, 2026, presidential runoff election. According to final results certified by Brazil's Superior Electoral Court, the 80-year-old leftist leader secured an unprecedented fourth term with 51.79% of the valid votes, defeating conservative Senator Flávio Bolsonaro, who garnered 48.21%. While the election resolved immediate political uncertainty, it triggered concerns among asset managers regarding the administration's public spending plans and commitment to fiscal discipline.

These spending anxieties are already complicating monetary policy. On November 4, 2026, the Central Bank of Brazil voted unanimously to keep its benchmark Selic rate unchanged at 13.75% per year, halting a cycle of consecutive cuts that began in March. In its official statement, the bank's monetary policy committee, Copom, pointed to deteriorating inflation expectations and rising fiscal uncertainty as key reasons to maintain an adequately restrictive monetary stance.

For a US retail investor, this macroeconomic tension translates directly into currency-related losses. Because the EWZ ETF holds assets denominated in Brazilian Reais but trades in US dollars, any drop in the local currency reduces the net asset value of the fund. Even if major Brazilian blue-chips on the local B3 exchange perform well, their translated value in US dollars falls when the real weakens.

Looking forward, investors will closely monitor whether President Lula announces concrete measures to curb public expenditures and who he appoints to lead his economic ministries ahead of his inauguration on January 5, 2027. Any further delay in detailing a credible fiscal consolidation plan could continue to weigh on the real, limiting foreign capital inflows.

In your brokerage app

For investors using US brokerage accounts, the MSCI Brazil ETF (EWZ)—listed in New York—remains the primary vehicle for exposure to Latin America’s largest economy. A weaker Brazilian currency directly compresses the returns of this fund, meaning that even if underlying holdings perform well in local terms, the value of the ETF in US dollars will suffer. Investors holding EWZ should monitor the USDBRL exchange rate as a key indicator of currency risk affecting their international equity portfolios.