Currency and Economic Indicators in Brazil

• Brazilian real strengthens against the US dollar: The exchange rate fell below R$ 5.50 for the first time in eight months, signaling increased investor confidence and favorable economic conditions in Brazil. The dollar closed at R$ 5.48, its lowest level in eight months, supported by better-than-expected economic activity data and easing geopolitical tensions.
• Brazilian economic activity growth: The economy grew 0.2% in April 2025, marking the fourth consecutive month of increase, with a 4% rise over the past 12 months. Inflation decreased to 0.26% in May, with a 12-month rate of 5.32%. The Central Bank raised interest rates by 0.5 percentage points in May, maintaining the Selic rate at 14.75%. GDP grew 1.4% in Q1 2025 and 3.4% in 2024.
• Market expectations for Selic and inflation: Analysts expect the Selic rate to remain at 14.75% through 2025, with inflation forecast slightly reduced to 5.25% and GDP growth projected at 2.20%. The exchange rate is expected to be around R$ 5.77 by year-end.

Stock Market and Corporate Developments

• Ibovespa index performance: The Ibovespa rose over 1%, nearing 140,000 points, driven by strong economic data and geopolitical easing. Key stock movements included Embraer (+5%) due to a new order from Portugal, Vale (+3%) after project approval, and Petrobras shares declined amid oil sector weakness.
• Embraer contract and fleet updates: Portugal agreed to purchase an additional KC-390 Millennium cargo aircraft from Embraer, increasing its fleet to six by 2029, with options for ten more. Meanwhile, LOT Polish Airlines plans to retire all Embraer jets, shifting to Airbus A220 aircraft.
• Petrobras investment and criticism: Petrobras signed R$4.9 billion contracts with Consag Engenharia to complete the second refining unit at the Abreu e Lima Refinery by 2029. However, the Brazilian Minister of Mines and Energy criticized Petrobras for high domestic natural gas prices and urged increased supply to reduce costs.
• Fras-le follow-on offering: Fras-le is preparing a R$300 million follow-on offering to increase liquidity and investor base, coordinated by BTG Pactual and Itaú BBA, with participation from the Randon family investment vehicle.
• Itaú Unibanco's venture capital move: Itaú is incorporating Kinea Ventures to launch Itaú Ventures, a Corporate Venture Capital fund with an initial R$500 million, aiming to complement its M&A activities.

Government Policies and Social Programs

• Ethanol blend increase proposal: The Brazilian government plans to raise ethanol content in gasoline from 27% to 30% by June to reduce fuel costs and fossil fuel dependency, as part of the 'Fuel of the Future' project.
• FGTS Saque-Aniversário payments: A new phase of FGTS withdrawals targets workers with suspended or ended contracts between 2020 and 2025, with R$12.1 billion authorized and an average withdrawal of R$7,700 per beneficiary scheduled for June 2025.
• Salary bonus payments by Caixa: Caixa Econômica Federal released salary bonuses for workers born in July and August, with 3.8 million workers eligible to withdraw R$4.5 billion this month, part of a total R$30.7 billion for 25.8 million workers in 2025.
• Financial aid via Caixa Tem app: Payments ranging from R$600 to R$1,000 are being released to low-income Brazilian families through social programs like Bolsa Família and Auxílio Gás, scheduled from June 16 to 30, 2025.

Commodity and Industry Updates

• Vale's copper expansion plan: Vale announced a US$290 million investment to increase copper production to 700,000 tons by 2035, addressing global shortages driven by electrification demand. The Bacaba project in Brazil will add 50,000 tons annually.
• Soybean oil price surge: Soybean oil prices rose over 5%, supporting soybean grain prices in Chicago, diverging from other commodity trends.
• Coffee sector challenges: Brazil faces a deficit in Arabica coffee production due to drought and high temperatures, with increased production costs and inflation causing a 5.13% drop in retail consumption. The global coffee market expects a deficit of 8-15 million bags in 2025/26.
• Industry opposition to export tax: Brazilian industry associations launched a manifesto against a selective tax on mineral exports, warning it would harm competitiveness and violate constitutional tax exemptions.

Financial Market Trends and Investor Behavior

• Shift to tax-exempt and foreign assets: Wealthy Brazilian investors are moving funds to tax-exempt assets, ETFs, and foreign markets in anticipation of higher income tax rates, seeking to reduce tax liabilities.
• Currency market changes: International suppliers increasingly reject US dollars in favor of local currencies due to volatility, with the dollar declining about 8% in 2025, prompting US companies to adapt payment strategies.

Banking and Payment System Developments

• Pix Automático launch: Banco Central introduced Pix Automático on June 16, 2025, enabling recurring payments with pre-authorization, offering lower costs and greater security compared to credit cards and other methods, likely boosting adoption among merchants.
• Pix system issues at Caixa: Caixa Econômica Federal experienced technical failures in its Pix system, causing transaction problems and temporary loss of funds, which may affect consumer confidence.
• Banco Carrefour growth: Banco Carrefour expanded its credit portfolio to R$29 billion and operational revenue by 29.1% in Q1 2025, unifying credit cards and increasing digital acquisitions, resulting in a 21% EBITDA increase and 13.3% ROAE.

Infrastructure and Sustainability Initiatives

• Electrification of public transport: The Federal District government announced that all buses in the Plano Piloto area will be electric by the end of 2025, part of a broader plan to electrify public transport and taxis, in partnership with BYD Auto.

Legal and Regulatory News

• Facebook ordered to pay damages: The Minas Gerais court ruled Facebook must pay R$40 million for moral damages due to a data leak, including R$10,000 compensation per affected user; Meta is contesting the decision.
• Increased IOF tax impacts aviation: The IOF tax on remittances abroad rose from 0.38% to 3.51%, adding an estimated R$600 million cost to the Brazilian aviation sector, potentially raising ticket prices and reducing competitiveness.

Other Relevant Financial News

• ASA acquires Gauss Capital: ASA, led by Alberto Safra, acquired Gauss Capital, increasing assets under management to R$5.5 billion, integrating Gauss's team and expanding its macro management profile.