Monthly FX Bulletin – June 2025

June 25, 2025 edition of the TCP / VNCFX FX bulletin, covering May. The real hit an eight-month high near R$5.50, up 12.3% for the year, supported by high real interest rates, falling inflation (5.32% over 12 months) and a weaker dollar. The document criticizes the surprise IOF tax increase, partly reversed, as a mistake that undermines confidence, and notes 1.4% first-quarter GDP growth, the Selic at 15% and the Israeli and US strikes on Iran, with limited market impact. It remains optimistic but cautious and recommends using the real's strength for hedging and portfolio rebalancing.