Dollar breaks sequence of falls and closes up 0.52%, at R$ 4.77; Ibovespa falls

O dollar rose 0.52% and ended this Monday (28) at R$4,771, after statements by Fed officials (Federal Reserve, central bank of U.S) reinforce bets on a 0.5 percentage point hike in the country’s interest rates in May. The move would represent a tougher cycle of interest rate hikes, favoring the US currency.

The outlook for Brazilian and North American interest rates weakens a cycle of appreciation of the real supported by high interest rates in Brazil, assets discounted on the stock exchange and the search for investors by countries that produce commoditieswhose prices rise amid the war in ukraine.

Today, the US currency recovered after registering the eighth session followed by devaluation on Friday. In the previous week, the dollar devalued 5.38%, and closed at R$ 4.746, lowest value since March 11, 2020.

already the Ibovespa ended in a fall of 0.29%, at 118,737.78 points, pulled down by the retreat of oil companies, including the Petrobras, amid the oil slump as the market expects lower demand for the commodity. The worsening of inflation projections in the country, which would require higher interest rates, also harms the stock market.

Last week, the main B3 index closed at 119,081 points, with a weekly increase of 3.27%.

See Monday’s highlights

biggest highs

• Marfrig (MRFG3) +4.02%;
• Minerva (BEEF3) +3.66%;
• Ambev (ABEV3) +2.93%;
• Assaí (ASAI3) +2.53%;
• BRF (BRFS3) +2.29%

biggest casualties

• Locaweb (LWSA3) -4.57%;
• Copel (CPLE6) -3.31%;
• Pan Bank (BPAN4) -3.30%;
• Eztec (EZTC3) -2.85%;
• Petrobras (PETR3) -2.63%

Petroleum

Since the invasion of Ukraine by Russia on the 24th of February, the markets for Petroleum show the highest volatility in two years, with commodity prices reaching levels last seen in 2008.

The commodity retreated throughout the day with the market expecting lower demand due to new lockdowns in China and the prospect of a higher interest rate cycle in the United States, which would slow down the country’s economy.

This Monday, Brent oil closed at US$ 112.48, down 6.77%, while WTI ended the day at US$ 105.96, with a devaluation of 6.97%.

Compared to previous years, oil remains at high values, due to the mismatch between supply and demand for the commodity, with the main producers, gathered in the OPEC+, not yet resuming pre-pandemic production levels. The picture was intensified with the tensions in Europe.

Inflation projections

The financial market forecast for the inflation in 2022 it increased from 6.59% to 6.86%. This is the 11th consecutive weekly rise in the median of forecasts for the IPCA (Broad Consumer Price Index). The expectation for 2023 also rose, from 3.75% to 3.80%.

If the forecast value for the IPCA is confirmed, this will be the second year of breaking the ceiling of the inflation target, which in 2022 should not exceed 5%. The center of the target is 3.5%, however, the margin of tolerance of 1.5 percentage points up or down allows the index to vary between 2% and 5%. The forecast for 2023 is also already above the center of the target of 3.25%, but within the upper limit of 4.75%.

The numbers are from Focus Bulletin of the Central Bank (BC). This Monday (28), the document, which gathers the estimates of more than 100 financial market institutions for the main economic indicators

It is worth noting that the worsening in projections occurs despite the president of the Central Bank, Roberto Campos Netoreaffirm that the basic interest rate, the Selic rate, will end the cycle of growth at 12.75% and that inflation will begin to fall in April. The market expects a Selic rate above 13%.

remember the war

Follow CNN’s live coverage of the conflict.

With the war in Ukraine completing a month, Ukrainian forces have been trying to reclaim territory from the Russians in recent daysaccording to a senior US defense official—who described them as “able and willing” to do so.

Talks between Russia and Ukraine have made little progress in recent days, as Russian forces continue to try to seize cities such as the capital Kiev and Mariupol. The countries are due to meet again on Tuesday (29), and the Ukrainian president signaled that the country would accept a neutrality statusa Russian requirement.

So far, Ukraine and Russia have sat at the table for a few rounds of negotiations. There was an attempt to open corridors for the removal of the population and the arrival of humanitarian aid.

From an economic point of view, the sanctions with the greatest economic impact on Russia are linked to the expulsion of Russian banks from Swifta global means of payment processing.

Highlights from the last 24 hours

*With information from Reuters and Anna Russi of CNN