SAO PAULO (Reuters) – The dollar abandoned its earlier high and even dropped on Monday, before stabilizing around the levels of the last closing, with investors replicating the external volatility amid a new negative opening in the stock exchanges. values in New York and lack of common direction in global currency markets.
At 10:53 (Brasília time), the spot dollar advanced 0.08%, at 5.0617 reais on sale. The price ranged from BRL 5.105 (+0.93%) to BRL 5.0363 (-0.43%).
On B3, the first-maturity dollar futures contract dropped 0.06% to 5.0850 reais.
Outside, the dollar held close to 20-year highs against a basket of currencies, but has already moved away from the day’s peaks in relation to two currencies considered “proxies” for risk sentiment: the Australian dollar and Chinese yuan.
China, a voracious consumer of commodities and the biggest destination for Brazilian exports, has again brought bad news. Retail and industrial activity in the country fell sharply in April, with extensive Covid-19 lockdowns confining workers and consumers to their homes.
Weak data in the country are seen as a sign of lesser economic dynamism around the world, which raises the already present risks of global recession or even stagflation – a scenario in which the dollar strengthens.
“A strong dollar, a ‘hawkish’ Fed (tough on monetary policy) and global stagflation risks, as well as worsening terms of trade and persistent fiscal risks, would keep the real weaker,” strategists at Société Générale said in a report.
They consider, however, that the Central Bank should continue to raise interest rates, leaving the rate at 13.75% (it is at 12.75%), which should offer “some support” to the real.
“The real will probably be traded sideways (range from 5.03 reais to 5.30 reais)”, they concluded.
(By Jose de Castro)
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