The Brazilian Real Exchange Rate under USChina Strategic Rivalry and Structural Vulnerabilities

This paper discusses how strategic competition between the United States and China affects the Brazilian real exchange rate. As the largest economy in Latin America, Brazil is highly dependent on commodity exports, particularly to China, making its currency vulnerable to changes in global trade and geopolitical tensions. This study mainly explores the main mechanisms through which external shocks affect the Brazilian real exchange rate, including trade concentration, capital flows, and changes in investor sentiment. By employing a qualitative research approach, combining historical policy analysis and trend-based data interpretation from institutions, such as the International Monetary Fund, the Bank for International Settlements, and the Central Bank of Brazil, this study finds that while Brazil has implemented policy measures, such as foreign exchange intervention and interest rate adjustments, these initiatives primarily target short-term fluctuations and have failed to fully address the economy's structural weaknesses. The research highlights that diversifying export markets and enhancing fiscal stability can effectively reduce currency vulnerability. This study also offers insights for other emerging markets facing similar challenges in an increasingly uncertain global environment.