Dollar rises more than 1% as risk aversion worsens among investors

O dollar rose 1.32%, quoted at R$5,182, around 9:20 am this Friday (23), benefiting from a risk aversion as investors increase their bets on a global economic recession as developed countries raise their interest rates to fight record levels of inflation .

Main development of the week, countries like United States O UK Switzerland and Brazil held their monetary policy meetings.

In Brazil, the basic interest rate, the Selic he was maintained at 13.75% per year, with the Central Bank committee ending the interest rate hike cycle started in March 2021.

The communiqué of Copom was well received by the market, with the municipality signaling that, despite the maintenance, a new high is not ruled out if “the disinflation process does not go as expected”.

We already United States the Fed raised another 0.75 percentage point to the range between 3% and 3.25% . In addition, the authorities of the municipality now project a higher final interest rate in 2022.

The median of estimates for the interest rate at the end of 2022 rose from 3.4% in June to 4.4%, indicating interest rate hikes of still high magnitudes this year. After the Fed’s statement bets on a new 0.75 percentage point hike in November gained even more traction.

On Thursday (22), the dollar retreated 1.12%, to R$ 5.11. already the Ibovespa rose 1.91%, to 114,070.48 points.

overall feeling

The global risk aversion of investors, triggered by fears about a possible generalized economic slowdown due to a series of interest rate hikes around the world to contain record levels of inflation, has varied in intensity depending on expectations about the interest rate hike cycle in the United States. United.

The process of raising the US rate continued in September with a new increase of 0.75 percentage point.

In addition, the Federal Reserve revised its projections for the interest rate to the end of 2022, indicating that it should make increases in magnitudes greater than previously predicted by the municipality.

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

Investors also monitor the state of the economy in China which also shows 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, while facing difficulties to reverse a situation of low consumption by the population, which impacts the country’s demand for commodities.

Even so, the Ibovespa and the real recently found room for recovery with an improvement in the mood of the market, supported by the positive outlook for commodities a stronger domestic economic scenario and a reduction in the perception of risks in relation to the elections.

This picture, however, is limited depending on the degree of risk aversion abroad.

*With information from Reuters