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The international press drew attention to the continued devaluation of the real against the dollar, highlighting concerns about the Brazilian economy
Real – The dollar is trading higher this week Tuesday, quoted at R$6,186 at 11:50 am, an increase of 0,95% compared to Monday. The move is reflecting investor concerns about the fiscal package that will be voted on by the Congress and the worsening perception of risk surrounding public accounts.
Ibovespa, the main index of the Brazilian stock exchange, opened slightly higher, but the scenario is still volatile. Analysts point out that, in addition to the domestic fiscal situation, the global strengthening of the dollar is also putting pressure on the real.
Expectations about the fiscal package in the dollar exchange rate
The spending cut package sent by the government foresees savings of $ 70 billion in two years and $ 375 billion 2030 up.
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The goal is to contain fiscal mismanagement. However, the market remains skeptical. Approval of the measures is considered crucial to restore consumer confidence. investors.
With the parliamentary recess approaching, pressure is mounting. If the package is not approved, the projection for the fiscal deficit could worsen, further boosting the dollar quote.
O Central Bank (BC) also released the minutes of its last meeting of the Monetary Policy Committee (Copom), highlighting the risks associated with the dollar's rise and its impact on inflation.
Central Bank Intervention
In an attempt to contain the rise of the dollar, the Central Bank sold more than $1,63 billion in the spot market.
The intervention momentarily relieved the dollar quote, but the movement was not enough. At around 9:40 am, the currency slowed down, but resumed its upward trend shortly afterwards.
The real is one of the worst performing emerging currencies in 2024, accumulating devaluation of 20% in the year. This weakened position is attributed to fiscal uncertainties and the lack of confidence in the international market.
international repercussion
International media outlets reported on the Brazilian economic situation. Reuters drew attention to the negative performance of the real, which closed at 6,09 per dollar last week. The agency highlighted the lack of confidence of investors, even with the interventions of the BC.
The portal BNN Bloomberg pointed out that currency devaluation has been one of the main factors driving inflation. The recent increase in the Selic rate, which reached 12,25%, is a reflection of the need to contain inflationary risks. There are predictions that the rate could reach 14% in March 2025, as services inflation remains resilient.
Lack of market confidence
President Lula also took a stand. In recent statements, he criticized the high interest rate policy, classifying it as "irresponsible". The speech, however, did not please the market. With the budget deficit around 10% of GDP, investors see the statements as a negative signal.
Furthermore, Bloomberg highlighted the growing pessimism surrounding Brazilian assets. Since the beginning of the current government, increased spending has fueled concerns about fiscal sustainability.
Analyst Ian Lima, from Inter Asset, highlighted that the Central Bank's interventions may even contain the dollar's advance in the short term, but do not solve the structural problem. “The dollar exchange rate is clearly on an upward path, and the government needs to act urgently,” said Lima.
Impacts on the market
The devaluation of the real has direct consequences for the economy. Imports become more expensive, putting pressure on domestic prices.
The increase in the cost of raw materials also impacts industry and agricultural production, which depend on imported inputs.
On the other hand, exporters end up benefiting. Soybeans, corn and other agribusiness products gain competitiveness in the foreign market with the rising dollar. The balance, however, is negative when the inflationary impact is considered.
In an interview with Reuters, economist Marcos Brito highlighted that the Brazil needs to regain confidence. "The Central Bank's occasional interventions help, but the problem is fiscal. As long as the government does not show responsibility with the accounts, the dollar will continue to rise.".
Projections for the dollar
A dollar quote should remain under pressure in the coming weeks. According to economists consulted by the Central Bank, the currency could surpass R$6,20 soon.
This week's Focus report points to a worrying scenario: forecast of rising inflation and an even higher Selic rate.
The deterioration in expectations for the Brazilian economy has led to a flight of foreign capital. International investors are seeking safer markets, while the real continues to weaken.
Congress will be the stage for the most important decisions in the coming days.
The vote on the fiscal package should bring some direction to the market. If approved, the government will gain time to reorganize its accounts and reduce pressure on the economy. dollar quote. Otherwise, the currency may continue to rise at a rapid pace.
If this **** remains in power we will see Brazil destroyed!
HELLO, I WENT ALL IN ON CRYPTO IN 2022 YOU DESERVE (AND ME TOO AHAHAH) A HIGH DOLLAR