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The Brazilian real was on track for its seventh straight day of gains on Tuesday, after right-wing candidate Jair Bolsonaro took a commanding lead in the country's presidential vote.
The dollar was recently down 1.9% against the Brazilian currency to 3.7091 reais, its lowest level since early August.
Mr. Bolsonaro came out ahead in the first round of Brazil's presidential election, garnering 46% of the vote, just short of the 50% needed to win outright in the first round. Some investors have cheered economic policies espoused by Mr. Bolsonaro's potential finance minister, Paulo Guedes, who has vowed to shrink the government's role in the economy, privatize state assets and give the central bank full independence.
The Brazilian realizes it's made up of all the losses it has suffered in the past three months. Yet with rising U.S. bond yields and a rising dollar spread over emerging markets, said Win Thin, global head of currency strategy at Brown Brothers Harriman.
"It's a tough call to buy emerging markets right now," he said.
Higher yields in the U.S. dull the appeal of emerging-market assets. A stronger dollar makes it harder for countries to service their dollar-denominated debt.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was down 0.1% at 90.17.
Write to Ira Iosebashvili at [email protected]
