Monthly FX Bulletin – February 2025

February 20, 2025 edition of the TCP / VNCFX FX bulletin, covering January. The real strengthened for a fourth straight week to R$5.84 per dollar, supported by US$71 billion in direct investment in 2024 and a 13.25% Selic that attracts carry trades. The bulletin also notes 2024 inflation of 4.83%, above the target ceiling, weak formal employment in December, Trump's tariffs and Lula's decision not to adopt new fiscal measures. It sees the real's gains as driven more by temporary than structural factors and recommends managing FX risk by taking advantage of favorable rates.