The result also comes after the announcement of deflation of 0.02% in Brazil in August, which should influence the BC’s decision on interest rates.
The dollar closed this Tuesday (September 10, 2024) at R$5.655, up 1.31% on the day. The US currency reached a high of R$5.671 around 3 pm. This is the highest level the exchange rate has reached since August 6.
The result is influenced by the sharp drop in the price of a barrel of oil. The devaluation of the commodity occurred in the wake of the monthly report from OPEC (Organization of the Petroleum Exporting Countries), which reduced projections for increased demand for the coming months.
The release of the IPCA (Broad National Consumer Price Index) for August was the highlight of the market (and the dollar) on the domestic scene. Brazil recorded deflation (a drop in prices) of 0.02% in August 2024.
The 12-month cumulative rate slowed from 4.50% in July to 4.24%. Brazil’s inflation target is 3.00%, but has a tolerance range of 1.5 percentage points. In other words, the August figure is still within the benefit range.
Inflation data is important because it can indicate how the Central Bank will guide the direction of interest rates in Brazil.
The basic rate (Selic) is at 10.5% per yeara relatively high level. The objective of maintaining it is to control inflation. More expensive credit slows down consumption and production. As a result, prices tend not to increase as quickly.
Despite the deflation in August, there is still an expectation that the Central Bank will raise the Selic rate at its September meeting. A rise in the dollar also puts pressure on inflation.
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The Ibovespa (B3’s main index) closed this Tuesday (September 10) at 134,319.58 points, down 0.31% on the day.
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