06/27/2024 – 17:44
After reaching its highest value in two and a half years the day before, the spot dollar closed on Thursday, the 27th, slightly lower against the real, but above R$5.50, with prices still reflecting the perception of increased fiscal risk, on a day in which the president of the Central Bank, Roberto Campos Neto, reinforced that the institution will not intervene in the exchange rate due to the level of prices.
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The spot dollar closed the day quoted at R$5.5083 for sale, down 0.20%, after reaching its highest closing value since January 2022 on Wednesday. In the month, the currency has accumulated an increase of 4.90%.
At 5:05 pm, on B3, the first maturity dollar futures contract fell 0.44%, to 5.5045 reais on sale.
Ibovespa
The Ibovespa closed higher this Thursday, in a performance led by the surge in Suzano after the company gave up on buying International Paper, while Sabesp was on the negative side with only Equatorial Energia making a proposal to be a reference shareholder in the privatization process.
The reference index for the Brazilian stock market, Ibovespa closed with an increase of 1.29%, at 124,226.46 points, the highest closing level since May 27, after having reached 124,279.03 points at the maximum and 122,641.84 points at the minimum of the day, according to preliminary data.
The financial volume totaled R$20.15 billion before final adjustments.
The market today
Earlier in the day, the Central Bank released its Inflation Report, which updated some economic projections and addressed specific issues related to monetary policy. Among the highlights, the Central Bank raised its projection for Gross Domestic Product (GDP) growth in 2024 from 1.9% to 2.3% — still below the 2.5% estimated by the Ministry of Finance.
Furthermore, the current account deficit estimated for 2024 was changed from US$48 billion to US$53 billion and the projection for Direct Investment in the Country (IDP) was reduced from US$70 billion to US$65 billion.
Late in the morning, Campos Neto and the Central Bank’s Director of Economic Policy, Diogo Guillen, gave a press conference in São Paulo. In it, Campos Neto pointed out that the increase in the Selic rate, currently at 10.50% per year, is not in the Central Bank’s baseline scenario.
Campos Neto also said that the recent depreciation of the real is in line with Brazil’s risk premiums. He also ruled out the possibility of the Central Bank acting in the market based on the level of the dollar.
“As we treat the exchange rate as floating, we understand that the action has to be caused by some specific dysfunction, we do not intervene targeting any type of level”, he said. “We believe in the principle of separation between monetary policy and exchange rate”, added Campos Neto.
The negative bias of the dollar abroad also favored some downward adjustment in Brazil, although the North American currency fluctuated in positive territory for much of the session, amid the perception of increased fiscal risk.
“There is a clear defensive movement by foreign investors concerned about the fate of public accounts. Even with specific movements of realization, the price is not giving way,” commented the director of the foreign exchange consultancy FB Capital, Fernando Bergallo.
After registering a minimum price of 5.4862 reais (-0.60%) at 9:42 am, the dollar reached a maximum of 5.5401 reais (+0.38%) at 12:32 pm.
The peak of the dollar occurred while Campos Neto was still giving a press conference in São Paulo and shortly before President Luiz Inácio Lula da Silva began a speech at a meeting of the Council for Sustainable Social Economic Development, the “Conselhão”, in Brasília
In his speech, Lula denied that his interview on Wednesday with the UOL portal had stressed assets, especially the dollar.
“Anyone who bets on the strengthening of the dollar against the real will be ruined,” said the president. “Whoever bets on derivatives will lose money in this country.”
In the final stretch, the dollar returned to negative territory, favored abroad and with investors preparing for the dispute around the month-end Ptax, on Friday.
The exchange rate calculated by the Central Bank based on spot market prices, the Ptax serves as a reference for the settlement of futures contracts. At the end of each month, financial agents usually try to direct it to levels that are more convenient for their positions, whether they are bought (in the sense of an increase in prices) or sold in dollars (in the sense of a decrease).
At 5:06 pm, the dollar index — which measures the performance of the US currency against a basket of six currencies — fell 0.12%, to 105.920.
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