In the first quarter of 2024, Brazil witnessed an unexpected positive economic shock, defying typical trends. Amidst this backdrop, the intricate dance between Brazil's interest rates and exchange rates unveils a hidden dilemma with far-reaching implications for investors, entrepreneurs, and policymakers alike.

The Brazilian Central Bank's recent decision to cut its key interest rate, the Selic rate, highlights a pivotal moment in the country's economic trajectory. As we delve deeper into the dynamics at play, it becomes evident that the convergence of global and domestic factors shapes Brazil's economic landscape.

Just over 10 days ago, we received a survey sent to us by a renowned consultancy. A few hundred companies in Brazil participated in the survey, which was conducted between the mid-Q1 and the middle of Q2 2022. Data which immediately and then surprisingly catches the eye are: … .