O dollar falls this Thursday (3), with the real following other currencies of exporting countries commodities and valuing as the prices of these products soar. The Brazilian currency also benefits from high interest rates in the country, preventing a flight of investments amid the war between Ukraine and Russia.
Around 9:13 am, the US currency retreated 0.10%, quoted at R$ 5.101. The first-maturity dollar futures contract traded on B3 had a rise of 0.09%, to R$ 5.104.
On Wednesday (2), the dollar retreated 0.91%, quoted at R$ 5.109. already the Ibovespa rose 1.80%, to 115,173.61 points.
War in Ukraine
Investors’ focus remains on the war in Ukraine and its aftermath. From an economic point of view, the main event involving the conflict is the series of sanctions announced by the United States and its Western allies.
Among them are the expulsion of Russian banks from Swift, a global payments system, and the freezing of reserves at the central bank of Russia. Countries that support Ukraine have already said they must implement new sanctions against Russia, which has seen its currency, the ruble, plummet and reach a historic low.
At the same time, the invasion by Russia continues, with new attacks on Kharkiv, Ukraine’s second largest city, and Kiev, the country’s capital, which is surrounded by Russian troops. The two nations hold a new round of talks on Thursday, after the first ended without progress. Follow CNN’s live coverage.
The war, and the chances of further escalations in the geopolitical scenario, increase risk aversion of investors and the search for the dollar. The DXY index, which compares the currency against others, is slightly higher on Thursday.
The VIX, called the “fear index” for trying to measure the degree of volatility in the market, rises to around 31 points, after reaching its highest level since September 2020.
Another consequence of the invasion is the rise in commodity prices, especially those linked to Russia and Ukraine, case of corn, wheat and oil. The Brent type, Petrobras’ reference for pricing policy, continues to rise and is already around US$ 115.
commodities
The situation in Ukraine reduces the benefits to the real of a cycle of investment migration to markets linked to commodities and seen as cheap, with Brazil also benefiting from high interest rates, which limits the effects of bets on an aggressive interest rate policy for the Federal Reserve.
The cycle was linked, in part, to expectations of more pro-growth measures in China that are raising hopes of a recovery in demand for metals, which leads to higher prices. On the other hand, interventions by the Chinese government in the market have generated downward pressures, in an ups and downs in prices.
In the case of oil, analysts already projected that the commodity would exceed US$ 100 throughout the year, which occurred with the crisis in Ukraine. The main factor for the increase is the mismatch between supply and demand for the commodity, with the main producers, gathered in OPEC, still not resuming pre-pandemic production levels, and the situation was intensified with the tensions in europe.
Another factor that weighed on this movement is the expectation of interest rate hikes in U.S in March, by 0.25 or 0.5 percentage point, reinforced by inflation data slightly higher than expected.
As a result, foreign investors have withdrawn from the US stock market. Federal Reserve Chairman Jerome Powell said Wednesday that the the already announced high interest rate cycle is maintained even with the war, signaling a 0.25 percentage point rise in March.
There are chances that Brazil will benefit from the rise in commodities, allowing the real to appreciate against the dollar or fall less than other currencies and the Ibovespa to rise due to the weight of shares linked to these products and also of banksfavored by high interest rates.
*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.
