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After breaking a record of R$5.9124 in the closing price on Wednesday, the commercial dollar closed trading today again with a strong increase of 1.30%, at R$5.9891. In this way, the currency renewed its historical high, with the real level at the lowest nominal level in relation to the American currency as its creation in 1994.
the dollar reached more than R$6 during the day. It was negotiated at $6,0029 at 1:12 pm, at the peak of this Thursday, when the financial market reacts negatively to the details of the spending cuts package presented today by the Minister of Finance, Fernando Haddad.
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- Behind the Scenes: Trauma from the time of DilmaS impeachment helps explain lula’s decision to include IR in the tax package
The value exceeds the historical high midday (highest mark during the day, with negotiations still open), when it reached R$5.97 on 13 May 2020, the height of the pandemic.
The day before, the American currency rose sharply after receiving information that the long-awaited package of spending cuts would be accompanied by an announcement that the government would exempt those earning up to R$5,000 from income Tax. Yesterday, the currency closed at the highest nominal value in the history of the Real Plan, at R$5.91.
Analysts estimated that the measure will have a fiscal impact that will erode some of the reduction in spending predicted in the other measures. And, in addition, the minister of Finance, Fernando Haddad, emerged from a conflict within the government, with the view that it was politically necessary to show that President Lula would also fulfill his campaign promise on the Income Tax.
– It was expected that ther would be a reduction in spending, and new spending appeared – says Charo Alves, analyst at Valor Investimentos. According to him, the lack of clarity in detail on where the amount will come from in compensation for the impact of exemption from Income Tax on the exchange rate.
In a report, the chief economist at Warren Investimentos Felipe
Salto said that “the change in IR is a matter of concern, because it could indicate a loss of income”. Salto says that despite the announcement showing estimated savings of R$70 billion, the exemption proposal may be unworkable, as it is not enough to achieve sustainability in the debt/GDP ratio.
The yen lost 0.28% against the American currency; the euro, 0.09%, and the advanced pound 0.06%. Among emerging currencies, the dollar lost strength: the South African rand appreciated 0.43%, while the Mexican peso rose 0.72%.
Selic future interest estimates at 14.75%
The interest curve opened the day under stress, due to the lack of confidence in the measures announced in the tax revision package and the exemption from Income Tax for those who earn up to R$5,000.
The interbank deposit rate (DI), which guides contracts negotiated in the market, opened the day rising along the top. For January 2026, the trading rate was at 13.725%, 0.12 pp above yesterday’s close of 13.5%. With distrust, the market already sees that the Selic will reach 14.25% at the end of the tightening cycle, in November 2025.
In announcing the measures this morning, Minister Fernando Haddad said that he does not believe in “money promises” and that the financial market must re-read and question “unfulfilled prophecies” regarding projections of economic growth and primary school results.
— The market must reinterpret what the government is doing. In terms of growth and deficit, the market made a mistake — he said, saying that the adjustment does not end with the package.
This morning the government detailed the measures of the fiscal package announced by the Minister of Finance,Fernando Haddad on Tuesday night. These include the minimum retirement age for military personnel and changes to the parameters for adjusting the minimum wage. The package will have an impact of R$70 billion over two years. by 2030, savings of R$400 billion will be made.
What are the potential long-term effects of the dollar’s rise on Brazil’s economy and local businesses?
Interview: The Dollar’s Surging Rise and Brazil’s Financial Landscape
Editor (Time.news): thank you for joining us today,Dr. Maria Silva, our esteemed economist and financial analyst. Recently, the Brazilian real hit its historical low against the dollar, closing at R$5.9891 and spiking earlier to R$6.0029. What factors are contributing to this dramatic rise in the dollar?
Dr. Maria Silva: Thank you for having me. The recent increase in the dollar can primarily be attributed to the market’s negative reaction to the spending cuts package introduced by Finance Minister Fernando Haddad. The details of the package revealed new spending commitments, which indicated a lack of fiscal restraint that investors were hoping for.
Editor: That’s captivating. many observers also pointed to the psychological aspect stemming from past economic crises, especially during Dilma Rousseff’s impeachment era. How does that influence current perceptions, notably regarding Lula’s approach to fiscal policies?
Dr.Silva: Absolutely.The trauma from past financial instability lingers in the market’s psyche. Lula’s decision to include income tax exemptions for those earning up to R$5,000 can be seen as an attempt to fulfill campaign promises, but it raises concerns about the sustainability of fiscal health. The fear of repeating past mistakes possibly makes investors skittish and contributes to the dollar’s rise.
Editor: You mentioned the response to the proposed fiscal package. Can you elaborate on why the market, particularly economists, expected a reduction in spending but instead observed an increase?
Dr. Silva: Certainly. Analysts anticipated that with the declaration of spending cuts, there would be a clear path toward reducing the fiscal deficit. However,the introduction of new spending coupled with income tax exemptions created confusion. Charo Alves from Valor Investimentos aptly noted that the lack of clarity regarding how the government plans to balance these new expenditures is troubling — it leads to uncertainty about the impact on the exchange rate.
Editor: So, if I understand correctly, the market’s expectation was not met, resulting in a lack of confidence. What implications does this have for everyday Brazilians, particularly in terms of purchasing power and inflation?
Dr. Silva: When the dollar strengthens, it means that imported goods and services become more expensive, leading to inflationary pressures on the economy. For everyday Brazilians, this can result in higher prices at the market and reduced purchasing power. As the real weakens, essentials such as food and fuel could see a notable hike in prices, affecting lower-income families the hardest.
Editor: Given this economic backdrop, what advice would you give to both policymakers and everyday citizens navigating this volatile financial landscape?
Dr. Silva: For policymakers, clarity and consistency in fiscal policies are crucial. They must reassure both local and foreign investors that Brazil is on a sustainable economic path. For citizens, being prudent with financial planning is essential; consider diversifying investments and looking for value-driven purchases as inflationary pressures mount.
Editor: Thank you, Dr.Silva,for sharing your insights. It’s clear that navigating the economic challenges stemming from the current dollar fluctuations will require thoughtful strategies at both the government and individual levels. We appreciate your expertise on this pressing issue.
Dr. Silva: Thank you for having me. It’s always a pleasure to discuss these critically important matters.