THE dollar retreats 0.70%, quoted at R$ 4.839, around 9:21 am this Monday (23), losing strength in relation to other currencies amid a reduction in risk aversion on the part of investors, which favors markets considered riskier, in the case of Brazil.
Optimism gained strength on Friday (20), after the China announce a higher-than-expected interest rate cut to stimulate the economy. Along with the expectation that the country’s lockdowns will be lifted in the coming weeks, the move eased fears about a global recession, encouraging investors.
In this session, the central bank will auction up to 15 thousand traditional foreign exchange swap contracts for the purpose of rolling over the maturity date of July 1, 2022.
In the previous week, the dollar fell 3.69%, the worst weekly performance since March 25, closing at R$4.871. already the Ibovespa rose 1.46%, in the second consecutive weekly advance, to 108,487.88 points.
global pessimism
The most recent instigator of global risk aversion was the interest rate hike in the US , announced by the Federal Reserve on May 4. Despite discarding hikes of 0.75 pp or a risk of recession, the municipality signaled at least two more hikes of 0.5 pp
Higher interest rates in the United States attract investments for the country’s fixed income due to its high security, but it harms stock exchanges around the world, including the North American ones.
Along with a series of interest rate hikes around the world, lockdowns in china to try to contain Covid-19, projections of a strong economic slowdown and even the risk of a global recession have increased, hurting markets and increasing investor risk aversion.
The growth of exports Chinese companies even slowed down to single digits, the weakest level in almost two years, while imports barely changed in April, amplifying concerns.
However, with the prospect that these restrictions could be lifted between May and June, Chinese demand is expected to return to previous levels, which would once again favor commodity exporters and alleviate some of the pressure on the real.
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*With information from Reuters
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
