Dollar falls with favorable flow and optimism after Ukraine-Russia talks

O dollar falls this Wednesday (30), maintaining a trend of appreciation of the real started in 2022 and supported by high interest rates in Brazil, assets considered discounted on the stock exchange and the search for markets linked to commoditieswhose prices soared with the war in ukraine.

At the same time, investors remain optimistic, and less risk averse, after negotiations between Russia and Ukraine on Tuesday (29). With less caution, the dollar tends to lose investments, which migrate to markets such as Brazil.

At around 9:13 am, the US currency retreated 0.41%, quoted at R$ 4.738. The first-maturity dollar futures contract traded on B3 fell 0.39%, to R$ 4,737.

On Tuesday (29), the dollar dropped 0.30%, ending at R$4.753, the lowest since March 9, 2020. Ibovespa rose 1.16% to 120,109 points, the highest since August 2021.

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 has fluctuated in the range of US$ 100 and US$ 110 in recent days. On the one hand, the market expects lower demand due to new lockdowns in china and the prospect of a Longer interest rate hike in the United Stateswhich would slow down the country’s economy.

At the same time, any news about the war influences prices, feeding or reducing fears of supply problems and influencing prices.

However, 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.

commodities

The surge in commodities with the conflict in Eastern Europe favors the Brazilian market, and its effects have helped to overcome risk aversion with the war in Ukraine, which has benefited the real so far.

The cycle is linked, in part, to the rise in oil and iron ore due to high demand amid the economic recovery. O interest rate hike in the US also feeds this migration, with the exit of the North American variable income.

Another factor behind this movement is expectations of more pro-growth measures in the China that are raising hopes of a recovery in demand for metals, which has led to higher prices, reinforced by the crisis in Ukraine.

However, Chinese government interventions in the market and a new outbreak of Covid-19 in the country with lockdowns, they still generate downward pressures, in an up and down in the price, which remains at high levels.

War in Ukraine

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.

Russia and Ukraine held a new round of talks on Tuesday in Turkey, with a Russian pledge to reduce military activity in the capital, Kiev, and in Chernihiv. The Ukrainian president signaled that the country would accept a neutrality statusa Russian demand, but no territorial concessions.

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.

*With information from Reuters