07/02/2024 – 18:07
Future interest rates closed down on Tuesday. Rates showed relief during the afternoon, in an apparent easing of the tensions that disturbed the curve and the exchange rate in the morning. The dollar stopped advancing in the second stage, which opened space for a correction in rates, which had been operating at very high levels. The movement, however, is seen as a pause for breathing, since fears about the possibility of more heterodox measures in the economy have not dissipated, amid the arm wrestling between President Lula and the Central Bank and the lack of progress on the fiscal issue.
At the close, the rate on the Interbank Deposit (DI) contract for January 2025 was at 10.765%, from 10.838% yesterday in the adjustment, and that of the DI for January 2026 was at 11.66%, from 11.77%. The DI for January 2027 had a rate of 11.97%, at a minimum, from 12.07%, and that of the DI for January 2029 projected 12.33%, from 12.38%.
Until mid-afternoon, rates were operating steadily upwards, following the pressure on the exchange rate and reflecting fears of government intervention in the economy, in the wake of new statements by President Lula. Speaking to Rádio Sociedade in Salvador, he said he was concerned about the rise in the dollar. According to him, the government has to act in relation to the situation regarding alleged speculation against the real. “We have to do something,” he said.
The speech raised fears that the government could adopt capital control measures to stem the surge in the US currency, which caused the dollar to rise even further, taking the price to a high of R$5.7009. Finance Minister Fernando Haddad publicly stated that there are no measures regarding the adoption of a Tax on Financial Transactions (IOF) on foreign exchange transactions. He assured that there is nothing the government plans to do other than “adjust the communication” regarding the autonomy of the Central Bank and the “rigidity” of the fiscal framework.
The worsening exchange rate took interest rates with it, especially since the dollar was close to R$5.70, encouraging bets on a resumption of the monetary tightening cycle. In the middle of the afternoon, the market improved and the dollar began to fall, taking the interest rate curve with it. The dollar ended up rising again at the close, to R$5.6648, but far from the high of R$5.70.
According to Column of the Stateallies of President Lula have argued that the government should bring forward his nomination for the presidency of the Central Bank with the aim of curbing the rise of the dollar, which would also significantly reduce volatility in the interest rate curve.
For the chief economist at Reag Investimentos, Marcelo Fonseca, it cannot be said that rates are at exaggerated levels given the fiscal problem that he classifies as “serious” and the risk of a resumption of monetary tightening. “If Copom needs to raise interest rates, rates still have room to rise,” he says.
On the fiscal side, the market is calling for effective action in the area of spending. “Concrete and decisive measures are needed to contain the situation. The revenue strategy has run its course,” says Fonseca.
Thus, the market was not swayed by the statements made by the Minister of Planning, Simone Tebet, who signaled that she will begin to put into practice the promised spending review agenda, presenting a first proposal for adjustments to Lula, which, according to her, “meet the political will”, discarding measures such as decoupling the minimum wage from retirement.
Aneel’s decision to reduce Enel SP’s rates, starting next Thursday, July 4, has passed without impact on prices. The reduction will be an average of 2.43% for consumers. Economists estimate an impact of between 0.03 and 0.04 percentage points on inflation in July, which will help to mitigate the impact of the adoption of the yellow flag also starting this month.
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