by José de Castro
SAO PAULO (Reuters) – The dollar suffered its biggest drop in two weeks this Friday, finally ending below 5.50 reais, with speeches by a director of the Central Bank being understood as a sign of greater readiness by the autarchy to correct excesses in the exchange rate.
The statements by the director of Monetary Policy Bruno Serra capped a week of expressive intervention, both operational and verbal, by the Bacen, whose apparent trigger was the visible detachment of the exchange rate against the pairs, which pushed the dollar above 5.57 reais on Wednesday. fair.
At this point, the dollar had accumulated a high of just over 1% against the real in the week. With events since then, the price ended up falling 1.10%, the biggest low since the week ended August 27 (-3.50%).
“Considering the auctions that the BC had already done and announced, the dollar even opened strong today. Perhaps, with this in mind, Bruno Serra decided to be more aggressive in his speech. And he did it,” said Cleber Alessie of Commcor DTVM.
For analysts, the BC will have to remain active in the exchange market to avoid a greater imbalance in the real compared to its rivals.
The interbank dollar opened down 0.36% this Friday and even reduced losses to just 0.16%, operating above 5.50 reais. This is even after the BC announced on Thursday another auction of up to 1 billion dollars in foreign exchange swaps, in what would be the third consecutive day of a net injection of dollars in the market.
But around 10:30 am (Eastern) the currency began to lose strength and quickly went into free fall, while the BC director said that the bank is “attentive” to the exchange rate, which is the role of Bacen to care for the smooth functioning of the foreign exchange market and who have done so.
“It doesn’t really matter why, if we identify a foreign exchange market with inadequate functioning, malfunctioning, we have to act, it’s in our mandate,” said the director. He said that there is still an expectation that the exchange rate will react to the “very fast” adjustment that the BC has been making to the Sellic rate.
On Thursday, the director of International Affairs at the BC, Fernanda Guardado, highlighted that the BC will intervene in the market when it observes large flows, irrational market reactions or pressures that demand relief given by the autarchy.
A day before, the date of the BC’s first extraordinary intervention of the week, the BC’s director of Economic Policy, Fabio Kanczuk, commented that when the US raises interest rates, Brazil has to “do more than them”, since the impact on the rate exchange rate here tends to be “much larger”.
But interest support may be lower, according to Itaú Unibanco. In a scenario review, the financial institution raised the estimate for the dollar at the end of 2021 to 5.25 reais (5.00 reais in the previous account) and also to 5.25 reais at the end of 2022 (5.20 reais before) , arguing that the increase in the Selic rate should “partially” offset the risks surrounding the exchange rate and in a “less intense” way than previously foreseen.
“We continue to warn that the risks to our scenario of currency appreciation have been increasing in recent months,” said the bank’s economic research team in a report.
“The main one is related to a significant fiscal deterioration that results in a stronger outflow of capital (with an eventual capital flight from Brazilians), promoting the depreciation of the real. Added to this is the increase in global inflationary pressures, which may result in an anticipation of interest rate hikes in the US.”
At the end of this Friday, the dollar in cash fell 1.11%, to 5.4545 reais on sale. The currency spent the entire session at a low, fluctuating from 5.507 reais (-0.16%) to 5.4344 reais (-1.48%).
The percentage drop in closing was the most intense since October 1st (-1.47%).
The price eased the October high to 0.09%. In 2021, however, the dollar still appreciates 5.07% against the real.
(Edition by Maria Pia Palermo)
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