The dollar opened the week on a new high, this time 1.47% and quoted at R$ 4.876 on sale. This is the highest value of the coin since March 22 this year, when it reached R$4,915. The Ibovespa, the main index of the Brazilian Stock Exchange (B3), continued its downward trend, with a devaluation of 0.35%, at 110,684.95 points — this is the sixth consecutive low.
In the afternoon, around 2:40 pm (Brasilia time), the American currency approached an appreciation of 3% and touched R$ 4.90. On Friday, the dollar had its biggest daily jump in more than two years, 4%, and closed at R$ 4.805.
The market in Brazil follows a global trend, with the prospect of rising interest rates in the United States and Europe to contain inflation and economic restrictions to combat the coronavirus in China. Chinese stocks had their biggest drop since February 2020.
The dollar value disclosed daily by the press, including the UOL, refers to the commercial dollar. For those who are going to travel and need to buy currency at exchange brokers, the value is much higher.
US interest rate hike
The appreciation of the dollar reflects fears of a faster increase in interest rates in the United States. Several Federal Reserve officials (Fed, the US Central Bank), including President Jerome Powell, recently indicated that interest rates should be raised by 0.5 percentage point in May, and part of investors already believe in an eventual adoption of an adjustment. 0.75 point in the current Fed cycle.
This boosted the dollar globally, both Friday and this morning. Higher interest rates in the US tend to attract resources currently invested in other countries, especially emerging ones, such as Brazil.
In the last session, the surge in the US currency was so intense that it triggered the first spot dollar auction of the year by the Central Bank. The BC placed US$ 571 million on the spot market.
“Given the hostile external environment today for the real, we cannot rule out another extraordinary intervention and reinforce our view that the BC is only intervening to correct one-off distortions in the exchange rate,” Citi strategists said in a report today.
Lockdowns in China
In addition to still brooding over the harshest indications from Fed officials, who are now entering a period of silence ahead of their May 3-4 meeting, global financial markets were assessing China’s growth prospects, which have been threatened by tight lockdowns. of combating covid-19.
In Shanghai, authorities erected fences outside residential buildings, sparking renewed public protests against the lockdown that is forcing much of the Chinese city’s 25 million residents to stay indoors. Meanwhile, in Beijing, residents are stocking up on groceries, fearing a lockdown.
“The possibility that a lockdown will be enacted [em Pequim]similar to that adopted in Shanghai, as the pandemic situation deteriorates in the city, bringing down the price of iron ore and other metallic commodities this Monday”, said in a report the macro and strategy team of BTG Pactual.
That appeared to hurt most emerging or commodity-sensitive currencies on the day, even after news broke that China’s central bank will lower the reserve requirement rate (the portion of money banks must hold in their reserves) for deposits in foreign exchange rate from 9% to 8%, which will take effect on May 15th.
The Central Bank will auction up to 15,000 traditional foreign exchange swap contracts in this trading session for the purpose of rolling over the maturity date of June 1, 2022.
*Com Reuters
