US and Brazil interest rates: Impacts on the exchange rate and agribusiness

The relationship between US and Brazilian interest rates plays a central role in global economic dynamics and market decisions. The monetary policies adopted by large economies, such as the United States, reverberate around the world, influencing the flow of capital and the value of currencies.  

In the case of Brazil, this interconnection gains additional relevance due to the country's strong dependence on foreign trade and agribusiness. The decisions of the Federal Reserve (Fed) and the Brazilian Central Bank (Bacen) are shaping a scenario full of opportunities and challenges for producers, exporters and investors. 

The divergence in interest rates between the two nations generates a significant differential, attracting or repelling investment and shaping the behavior of the exchange rate. This scenario directly impacts the competitiveness of Brazilian commodities and the profitability of the agricultural sector.   

In this article, you'll learn:

• What are interest rates and how do they affect financial markets?
• How has monetary policy evolved between the US and Brazil?
• What impact does the interest rate difference have on the USD/BRL exchange rate?
• How is Brazilian agribusiness affected?
• What are the future expectations for monetary policy?
• How can you protect yourself from exchange rate and interest rate fluctuations?
  
  

Have a great read! 

What is interest and how does it affect the financial markets? 

Interest represents the cost of money or the remuneration for its use, and is an essential instrument of central bank monetary policy. By adjusting the basic interest rate, they regulate the supply of credit in the economy, directly influencing investment, consumption and, consequently, economic growth and inflation. Higher rates make credit more expensive and discourage spending, while lower rates encourage economic activity. 

In a globalized context, the basic interest rate of a major economy, such as the United States, acts as a benchmark. High interest rates in that country tend to attract foreign capital, increasing the value of the dollar and devaluing other currencies. On the other hand, low interest rates seek to stimulate the local economy, but can direct capital to other regions in search of greater profitability.  

How has monetary policy evolved between the US and Brazil? 

The United States' monetary policy, led by the Federal Reserve, has recently undergone a change in direction. On September 17, 2025, the Fed reduced the basic interest rate by 0.25 percentage points, to a range of 4% to 4.25% per year, the first cut after a prolonged cycle of stability. The decision reflected signs of a slowdown in the American economy, marked by a weakening job market. In August, only 22,000 jobs were created, compared to a forecast of 75,000, and the unemployment rate rose to 4.3%, the highest level in four years. 

Although inflation is still running at 2.6% a year, above the 2% target, the Fed said that the recent rise was due to temporary factors, such as the trade tariffs imposed by the US government. The cut was aimed at preventing a sharper slowdown in the economy, preserving growth and adjusting financial conditions. 

According to the report by Guilhermo Marques, Global Head of Foreign Exchange and Listed Derivatives at Hedgepoint, this move marked the beginning of a gradual change in risk perception, with investors reacting positively to signs of monetary easing. This analysis points out that the prospect of further cuts by the Fed has reduced the attractiveness of US bonds, favoring emerging currencies such as the Brazilian real. At the same time, domestic factors, such as the discussion about income tax exemption for foreigners on public bonds, reinforced the inflow of foreign capital and contributed to the appreciation of the real against the dollar. 

In Brazil, the Central Bank opted to keep the Selic rate at 15% per year, widening the interest differential with the United States. This mismatch strengthens the carry trade, making Brazilian assets more attractive to foreign investors, but also keeps the cost of credit high domestically. The combination of high interest rates, political uncertainty and a volatile exchange rate creates a challenging environment for the domestic market and for long-term planning in agribusiness. 

The American scenario 

In the United States, there are constant clashes that continue without any clear direction. The federal budget remained without an agreement, prolonging the partial government shutdown. The impasse stems from political confrontations over spending and debt, reflecting the polarization between Congress and the White House. 

The release of indicators in the US was hampered by the shutdown, but some data and events are worth highlighting. Firstly, the Federal Reserve announced a 0.25 percentage point cut in the basic interest rate at its 10/29 meeting, adjusting the Fed Funds range to 3.75% - 4.00% per year.  

This decision - the second consecutive reduction - was made despite the shutdown scenario, signaling the Fed's concern about the economic slowdown and inflation under control. In fact, annual consumer inflation stood at ~3.0% in September, up slightly from 2.9% in August, but still close to the 2% target. With no new official data for October (due to the shutdown), the Fed acted pre-emptively to support the economy. 

What impact does the interest rate difference have on the USD/BRL exchange rate? 

The difference in interest rates between the US and Brazil has a direct and significant impact on the USD/BRL exchange rate, directly influencing capital flows and the attractiveness of each country's financial assets. When US interest rates fall, the attractiveness of US fixed income for international investors naturally decreases. This movement drives them to seek riskier and more profitable assets in other markets. 

After the Federal Reserve's decision in September 2025, the dollar closed at R$5.30, the lowest level in fifteen months. This fall reflects the search for better returns in emerging economies, such as Brazil, where the interest rate differential remains high. The influx of foreign capital to take advantage of these more advantageous returns strengthens the real, reducing the dollar's exchange rate against the Brazilian currency.

How is Brazilian agribusiness affected? 

Brazilian agribusiness is feeling the effects of the difference in interest rates in a positive way with the current scenario of interest rate cuts in the USA. The reduction in US rates makes international capital more accessible to companies in the sector that depend on dollar financing. This is especially advantageous in a credit-intensive sector such as agriculture. 

In addition, the appreciation of the Brazilian currency, the result of lower interest in American bonds, reduces the cost of importing highly dollarized agricultural inputs. As a result, fertilizers, pesticides and machinery become cheaper, relieving pressure on production margins. According to the O Presente Rural portal, this condition improves external financing conditions and reduces domestic inflationary pressure, contributing to the sector's global competitiveness with lower financial and exchange costs. 

What are the future expectations for monetary policy? 

Future expectations for monetary policy indicate continued easing in the United States and a more cautious stance in Brazil. The Federal Reserve is expected to make further interest rate cuts in the coming periods. According to a report by Hedgepoint, the market projection is for two more cuts of 0.25 percentage points in US interest rates this year to 2025. 

For Brazil, on the other hand, projections indicate that cuts in the Selic rate should only occur from the beginning of 2026, according to Alberto Ramos, Goldman Sachs' chief economist for Latin America. The Brazilian Central Bank is keeping the Selic rate at 15% a year, due to inflation expectations still above target and a resilient labor market. As a result, the interest rate differential between the two economies should persist for some time, maintaining the attractiveness of the Brazilian market for foreign capital. 

How can you protect yourself from exchange rate and interest rate fluctuations? 

In a scenario of exchange rate volatility and uncertain monetary policies, risk management is essential to preserve margins and ensure financial stability. Producers who export commodities, for example, can use hedging instruments to fix the value of the dollar in future transactions, protecting revenues and the costs of imported inputs. Investment diversification and strategic market monitoring also help to mitigate risks. 

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