Abroad, the dollar also retreated this Wednesday against other currencies of emerging countries (Credit: REUTERS/Dado Ruvic)
SÃO PAULO (Reuters) -Optimism regarding the scenario of inflation and interest rates in Brazil, added to the positive environment abroad, made the dollar extend the losses against the real this Wednesday, with the North American currency reaching the lowest closing value since June last year.
In the morning, the US Department of Labor reported that the consumer price index rose 0.1% last month, slowing down after advancing 0.4% in February. The result raised the expectation that the Federal Reserve will not be aggressive in its next monetary policy decision, which gave strength to riskier assets, such as the real.
In Brazil, optimism with inflation control remained in the market, after favorable data from the Extended Consumer Price Index (IPCA) on Tuesday, and in relation to the new fiscal framework. The result was another day of bearish pressure for the US currency.
The spot dollar closed the day quoted at 4.9408 reais on sale, down 1.34%. This is the lowest price since June 9, 2022, when it closed at 4.9166 reais. Since June last year, the dollar has not closed below 5 reais.
On the B3, at 5:21 pm (Brasília time), the first contract dollar futures contract fell 1.42%, at 4.9530 reais.
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In recent weeks, positive assessments of the new fiscal framework have already been reducing the strength of the dollar against the real, with investors seeing a lower risk of a runaway public debt in Brazil.
In Tuesday’s session, the release of favorable IPCA data –which rose 0.71% in March, compared to 0.84% in February– and the perception that the new fiscal framework could be more robust had already taken the dollar to retreat more than 1%.
This Wednesday, optimism continued, including with help from abroad.
“The US price index came in benign, inflation is subsiding and the Federal Reserve is likely to make just one more interest rate hike. Here in Brazil, the dollar was exaggerated due to doubts about the government. Now we are seeing the US currency below 5 reais”, pointed out the director of consultancy Wagner Investimentos, José Faria Júnior.
“Since the American interest rate is hovering around 5% a year, and Brazil has a rate of 13.75% a year, the real interest rate will still be very high. For now, we will still have a very high exchange rate differential”, added Faria Júnior.
This interest rate differential has favored the inflow of resources into Brazil, which has contributed to the drop in prices. With positive expectations regarding the framework, investors have also withdrawn price risk premiums in recent weeks, which translates into a fall in the dollar.
Professionals heard by Reuters in recent days have claimed that the fall could continue, with the US currency stabilizing at even lower levels, if the progress of the new fiscal framework is favorable.
Abroad, the dollar also retreated this Wednesday against other currencies of emerging countries, although the real was the highlight of the day.
At 17:21 (Brasília time), the dollar index – which measures the performance of the US currency against a basket of six currencies – fell 0.57%, at 101.540.
During the afternoon, the Central Bank informed that the exchange flow to Brazil in the first week of April was positive in 2.553 billion dollars.
Earlier, BC sold all 16,000 traditional currency swap contracts offered in rollover.
(By Fabrício de Castro; editing by Isabel Versiani and André Romani)
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