Dollar drops below BRL 5.15 with risk aversion reduction after Fed minutes

O dollar fell 0.51%, quoted at R$5,141, around 9:15 am this Thursday (18), with the real and other currencies benefiting from a flow of investments after a reduction in risk aversion among investors, reflecting the disclosure of the minutes of the last meeting of the Federal Reserve .

In the minutes, the directors of the central bank of the United States pointed out that the rhythm of the cycle of high fees will depend on the next data on the economy, but it will be necessary to keep interest rates at a restrictive level for longer.

The Fed’s view of the beginning of an improvement in the inflation situation reinforced the perspective that the autarchy will begin to carry out lower interest rate hikes, in a process that should still continue in 2023. The lower interest rate scenario benefits riskier assets, in the case of Brazilian market.

On Wednesday (17), the dollar rose 0.54%, to R$ 5.168. already the Ibovespa advanced 0.17%, to 113,707.76 points.

overall feeling

Strong global risk aversion by investors, triggered by fears about a possible widespread economic slowdown due to a series of interest rate hikes around the world to contain record levels of inflation, has eased in recent days, reflecting expectations of a cycle of interest rate hikes. less aggressive in the United States.

The process of raising the US rate continued in July with a new increase of 0.75 percentage point. However, the Federal Reserve has signaled that it may make smaller hikes as the country’s economy already shows signs of slowing, seeking to avoid a recession.

Higher interest rates in the United States attract investments for the country’s fixed income due to its high security and favor the dollar, but harm markets and stock exchanges around the world, including the North American ones.

Investors are also monitoring the situation of China’s economy, which is also showing signs of a slowdown linked to a series of lockdowns in relevant cities. The expectation is that the Chinese government will intensify an effort to stimulate the economy, but with difficulties to reverse a situation of low consumption by the population, which impacts the country’s demand for commodities.

In the domestic scenario, the Benefits PEC which creates or expands social benefits with an estimated cost of R$ 41 billion, was poorly received by the market, as it reinforces the fiscal risk by bringing new spending above the ceiling.

The Ibovespa and the real were harmed by the scenario, but an apparent greater optimism in the market has allowed a recovery.

*With information from Reuters