06/25/2024 – 17:24
After the relief of the two previous sessions, the dollar in cash rose more than 1% this Tuesday, 25th, in Brazil, to above R$ 5.45, with prices driven abroad, where the North American currency had firm gains against other currencies, in a reversal of the previous movement, when investors went in search of higher risk assets.
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The release of the minutes of the last meeting of the Central Bank’s Monetary Policy Committee (Copom) and the statements by the BC’s Monetary Policy director, Gabriel Galípolo, were closely followed, but did little to change the perception of the domestic scenario.
The dollar in cash ended the day at R$5.4545 on sale, up 1.19%. During the month, the currency accumulated an increase of 3.88%.
The dollar in the day
The US currency fluctuated upwards against the real throughout the day, with investors taking advantage of the bias coming from abroad to rebuild long positions in the US currency (in the direction of rising prices), after the most recent lows.
The movement to look for dollars abroad was favored by statements from Federal Reserve Director Michelle Bowman, who reiterated her opinion that keeping the interest rate stable “for some time” will probably be enough to bring inflation under control. At the same time, she reinforced her willingness to increase interest rates if necessary.
“Inflation in the US remains high, and I still see several risks of rising inflation that affect my outlook,” he said.
Additionally, data showing rising U.S. home prices and better-than-expected consumer confidence contributed to the strong dollar.
“The dollar is beating its peers and emerging currencies due to the numbers (from the USA), which were good, and the ‘Fed boys’, indicating that interest rates may not be cut this year”, commented Jefferson Rugik during the afternoon, director of Correparti Corretora.
At 5:11 pm, the dollar index — which measures the performance of the US currency against a basket of six currencies — rose 0.11%, to 105.630.
In Brazil, attention was focused on the Copom minutes and Galípolo’s statements during a video conference.
In the document, the Copom indicated that, in addition to the unanimity among members regarding maintaining the Selic rate at 10.50% per year, everyone agreed that the collegiate should “pursue the re-anchoring of inflation expectations regardless of the sources behind of the lack of anchorage now observed”.
Furthermore, the document brought an increase in the neutral interest rate — the one in which there is no stimulus or contraction in the economy — from 4.50% to 4.75%, according to the BC’s calculation.
Galípolo acknowledged the discomfort with the recent advance of the dollar against the real, but highlighted that the BC does not have an exchange rate or interest differential target, but rather an inflation target.
Professionals interviewed by Reuters assessed that both the minutes and Galípolo brought little new to the scenario. At the same time, according to them, the fiscal issue remains a factor of concern for the market, which helped justify a new rise in the dollar against the real this Tuesday.
“We are still experiencing a bit of pessimism. We need something that will minimally help the government to calm tensions in relation to fiscal matters”, commented Matheus Spiess, analyst at Empiricus Research.
In this scenario, after reaching a minimum price of 5.4049 reais (+0.27%) at 9:36 am, the spot dollar reached a maximum of 5.4570 reais (+1.24%) at 4:56 pm, shortly before closing.
In the morning, the Central Bank sold all 12,000 traditional currency swap contracts offered to roll over August maturities.
Ibovespa
The Ibovespa closed with a modest decline this Tuesday, ending a sequence of five trading sessions in the black, in a movement mainly determined by the fall in Vale’s shares, while the Central Bank endorsed the stable Selic scenario in the coming months.
The Brazilian stock market reference index, Ibovespa fell 0.32%, to 122,243.42 points, according to preliminary data, after accumulating a gain of almost 3% in the previous five sessions.
At the day’s high, it reached 122,849.07 points. At the minimum, at 121,997.14 points. The financial volume on the exchange totaled R$13.83 billion before final adjustments.
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