O dollar rose 0.25%, quoted at R$5,165, around 9:14 am this Wednesday (22), favored by a caution in the markets before the participation of the president of the Federal Reserve, Jerome Powell at a hearing in the United States Congress.
The expectation is that Powell will give more clues about the next steps of the cycle of high interest rates in the country, which has global repercussions and favors the dollar. At the last meeting, the fed raised interest rates by 0.75 percentage point, the highest rise since 1994 and left the door open for a further increase of this magnitude.
The movement seeks to combat highest inflation in the country in 40 years but investors expect an aggressive bullish cycle, reinforcing fears of a recession in United States and a strong global economic slowdown, increasing risk aversion and the search for safe assets, such as the US currency.
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 August 1, 2022. The BC operation helps to provide liquidity in the currency, but experts consulted by the CNN Brasil Business point out that the body could do more to contain exchange rate volatility .
On Tuesday (21), the dollar dropped 0.67%, to R$5.153. already the Ibovespa retreated 0.17% to 99,684.50 points, the lowest level since November 4, 2020.
overall feeling
Investors still maintain a strong global risk aversion triggered by fears about a possible general economic slowdown due to a series of interest rate hikes around the world to contain record levels of inflation, which would harm many types of investments.
The main cause for this aversion is the cycle of high interest rates in United States with the most recent increase announced by the Federal Reserve on June 15th. the organ raised interest rates by 0.75 percentage point at its highest since 1994, and left a door open for a increase of the same magnitude in July.
Higher interest rates in the United States attract investments to the country’s fixed income due to its high security and favor the dollar, but harm bond markets and stock exchanges around the world, including the US.
At the same time, the European Central Bank (ECB ) signaled interest rate hikes from July onwards, while the China faces a new increase in Covid-19 cases with fears of new restrictions and fiscal risk in Brazil has regained strength.
As a result, the combination of a weakened domestic scenario, with the return of tax risks and fears about interference in the Petrobras and the prospect of strong monetary tightening abroad once again harmed the Brazilian market.
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*With information from Reuters
Source: CNN Brasil
I’m Susan Karen, a professional writer and editor at World Stock Market. I specialize in Entertainment news, writing stories that keep readers informed on all the latest developments in the industry. With over five years of experience in creating engaging content and copywriting for various media outlets, I have grown to become an invaluable asset to any team.
