The dollar in cash achieved the fifth consecutive session of gains this Tuesday (16), renewing its highs in more than a year and returning to March 2023 prices, amid the generalized advance of the US currency abroad, with investors reacting to the prospect of high interest rates in the US for longer and tensions in the Middle East.
Concerns about the Brazilian fiscal balance also contributed to the appreciation of the dollar, after the government announced the reduction of the fiscal target for 2025.
The current price is second only to the dollar exchange rate in the first days of President Lula’s current government, when the currency jumped to the R$5.45 range, at the beginning of January 2023.
Masterclass
The Most Promising Stocks on the Stock Exchange
Download a list of 10 Small Caps stocks that, in experts’ opinion, have appreciation potential in the coming months and years, and watch a free class
Despite the strong rise in the dollar during the session, the Central Bank once again simply observed business, without holding extra exchange rate swap auctions or selling dollars with repurchase commitments — actions that, in other years, the institution adopted to reduce volatility .
According to Reutersmarket operators are already considering the possibility of the BC intervening in the exchange rate again, just as it did at the beginning of the month.
What is the dollar exchange rate today?
The spot dollar closed with an increase of 1.64%, at R$5.269 when buying and R$5.270 when selling. At the session high, it approached R$5.29, reaching R$5.287. In five business days, the currency accumulated an increase of 5.23% against the real.
Continues after advertising
At 5:39 pm, the first-month dollar futures contract rose 1.72%, to 5,284 points.
Trade dollar
- Sale: R$5,267
- Purchase: R$5,266
- Maximum: R$5,287
- Minimum: R$ 5,199
Tourism dollar
- Sale: R$ 5.48
- Purchase: R$ 5.30
Read more: Types of dollar: find out the main ones and the importance of this currency
The dollar hit a five-month high against the pound and euro on Tuesday, a day after stronger-than-expected U.S. retail sales data lifted Treasury yields, raising concerns of intervention. from Tokyo as the yen remains at its lowest level since 1990.
“This morning we are heading towards what could be another difficult day for the Brazilian real,” said Matheus Spiess, an analyst at Empiricus Research, highlighting the markets’ frustration with the government’s decision to relax the primary result target to zero for the next year, in a reduction of the previously announced effort, which predicted a surplus of 0.5% of the Gross Domestic Product (GDP).
“We already knew that (the government) would do this, but the fact that it did it finally begins to unlock a perception that the government would be willing to undertake target revisions so as not to see spending being harmed, instead of controlling the spent,” Spiess explained.
“And there is also the fact that the economy abroad has shown some positive signs. A stronger economy means higher inflation and, consequently, this greater inflationary resilience demands a higher level of interest rates”, added the analyst.
Abroad, several risky real pairs also had sharp losses, with emphasis on the Mexican peso, which lost 1.20%. The Chilean peso fell 0.80%, while the Australian dollar fell 0.50%.
Exchange rate intervention?
According to Eduardo Moutinho, market analyst at Ebury Bank, “the current levels (of the dollar) are clearly uncomfortable for the BC, considering the impact on inflation, and, with the Fed maintaining higher interest rates for longer, an intervention must be appropriate to avoid a greater devaluation of the real”.
There were practically no extraordinary interventions by the Central Bank in the exchange rate throughout the government of President Luiz Inácio Lula da Silva, with the exception of a swaps auction at the beginning of this month to, according to the authority, meet a specific demand for the redemption of a bond, which, by the way, expired on Monday.
In general, the Central Bank always reinforces that it has no intention of controlling the exchange rate level, which is fluctuating, and that any actions in the dollar aim to guarantee the smooth functioning of the market in the event of dysfunctions.
USA
Data on Monday showed that U.S. retail sales rose 0.7% last month, compared with a 0.3% rise predicted by economists polled by Reuters, reinforcing expectations that the Federal Reserve is unlikely to hurry to cut interest rates this year.
The less the Fed cuts interest rates, the better for the dollar, which becomes more attractive to foreign investors when the yields offered by the North American market — already interesting because it is extremely safe — remain higher.
Ten-year Treasury yields, a global reference for investments, have continued to rise since yesterday morning, as have contracts with shorter maturities.
“The US economy continues to grow very solidly, at a level above the long-term trend, which supports higher US bond yields and argues against the Fed cutting interest rates,” said Kenneth Broux, head of corporate research, foreign exchange and rates at Société Générale.
Markets are now pricing in a 41% chance of the Fed cutting rates in July, compared with about 50% before the data, according to CME’s FedWatch tool.
The day before, the spot dollar closed the day at 5.1835 reais on sale, up 1.21%, the highest closing value since March 27, 2023.
(Com Reuters)