By Luana Maria Benedito
SAO PAULO (Reuters) – The dollar began to fall this Wednesday, reaching below 5.23 reais in the day’s low, reflecting the prospect of higher interest rates in Brazil and appeasing comments from authorities on the domestic fiscal situation.
At 10:28, the dollar retreated 0.16%, to 5.2528 reais on sale, after touching 5.2267 reais in the day’s low, down 0.66%. The dollar futures traded on the B3 lost 0.20% this morning, at 5.2465 reais.
On Tuesday, the US spot currency had already lost 2.25%, to 5.2613 reais on sale, its sharpest devaluation since March 10 (-2.39%).
Contributing to the good mood of investors, the president of the Chamber, Arthur Lira (PP-AL), said the day before at an XP event that Congress will not approve measures that go against fiscal responsibility or default on payment of court orders, ensuring that there will be a solution within the spending ceiling.
Also on Tuesday, the president of the Central Bank, Roberto Campos Neto, said there was an improvement in the country’s fiscal indicators, stating that the backdrop for gross debt is now “undeniably better” than it was a few months ago.
“We have seen the authorities trying to show that the agenda is strong, and the tendency is that in the coming days we will see more important figures conveying the feeling that things (on the fiscal and reform front) are moving forward,” explained Gustavo Cruz, strategist of RB Investimentos. “This favors the dollar’s fall to a lower level.”
In addition, he said, signs of persistence from high inflation are prompting investors to consider the possibility of an even tougher positioning by the Central Bank, which could benefit the Brazilian currency.
This Wednesday, IBGE data showed that electricity pressure led Brazil’s official inflation preview to soar to the highest level for August in nearly two decades.
Amid fears about price dynamics, the BC had already intensified the dose of monetary tightening in its last meeting by adopting a 1 percentage point increase in the Selic, at 5.25% per year, already indicating another increase of equal magnitude in the next meeting of the collegiate, in September.
Higher interest rates make the Brazilian fixed income market more attractive to foreign investors, which, in turn, tends to increase the inflow of dollars into the country and provide support for the real.
Meanwhile, abroad, the dollar index against a basket of six strong currencies advanced 0.10% to 93.006.
Investors should keep an eye on the Federal Reserve in the coming days as the annual Jackson Hole central bankers conference takes place. Any signs of an imminent reduction in Fed stimulus could hurt emerging market assets, experts say.
+ Until 2019, there were more people in prisons than on the Brazilian stock exchange
+ Geisy complains about social media censorship: “Instagram is chasing me”
+ Aloe gel in the drink: see the benefits
+ Nicole Bahls had already been warned about her ex-husband’s infidelity
+ Lemon-squeezing trick becomes a craze on social media
+ Chef playmate creates aphrodisiac recipe for Orgasm Day
+ Mercedes-Benz Sprinter wins motorhome version
+ Anorexia, an eating disorder that can lead to death
+ US agency warns: never wash raw chicken meat
+ Yasmin Brunet breaks the silence
+ Shark is captured in MA with the remains of youngsters missing in the stomach