Senate 2026 in Santa Catarina: How the Race for Seats Affects the Dollar and Your Wallet

This overview marks this portal's seventh consecutive analysis of the impact of state legislative elections on Brazilian macroeconomic stability. As observed in reports on the disputes for seats in Espírito Santo (ES) and Sergipe, the reshaping of the Senate acts as a thermometer for the country's fiscal sustainability. From the analytical perspective of credit and liquidity cycles, Brazil is in a prolonged monetary tightening phase, where global liquidity becomes more selective. Any indication that the future Senate might adopt a lenient stance on public spending immediately raises the government's borrowing costs, hindering corporate deleveraging and limiting GDP growth.

The central risk of a sharpened polarization in the Santa Catarina dispute lies in the potential paralysis of the microeconomic and tax reform agenda. Recent volatility, illustrated by the commercial dollar's monthly appreciation of 0.73% against the R$ 5.186 recorded thirty days ago, demonstrates how electoral uncertainty affects the dollar and foreign portfolio flows. If electoral projections indicate a legislative bench less committed to austerity, the trend will be toward greater currency depreciation, which will pressure import costs and refuel inflation of tradable goods. The stability of the Selic rate at 14.00% p.a. therefore functions as a temporary barrier against capital flight but does not negate the need for deep fiscal reforms.

Projecting future horizons, we estimate that over the next 30 days, the exchange rate will remain volatile within the R$ 5.20 to R$ 5.30 band, following the finalization of regional slates. In 90 days, the disclosure of new accumulated IPCA data will determine whether the Central Bank will have room to ease monetary policy or if persistent inflation will necessitate maintaining high interest rates. For 180 days from now, the financial market's focus will be on