Dollar rounds stability with optimistic exterior and caution with PEC of Fuels

O dollar fell 0.07%, quoted at R$ 5,230, around 9:22 am this Tuesday (28), hovering around stability as different scenarios for investors abroad and at the domestic level impact the real .

Global risk aversion has dropped in recent days after cities in China announce the lifting of restrictions to combat Covid-19, raising expectations of a return in demand for commodities and a minor impact on the world economy.

In addition, the market revised expectations for the cycle of interest rate hikes in United States waiting for a Federal Reserve more cautious and less aggressive after weak economic data.

The combination favors markets considered to be riskier, as is the case with Brazil. On the other hand, the fiscal issue has returned to the radar of investors. The prospect that the federal government will increase its spending through Fuels PEC with a possible disregard for the spending ceiling displeases the market, and may withdraw investments from the country.

The bill’s rapporteur in the Senate, Fernando Bezerra Coelho (MDB-PE), will present its opinion on the project this Tuesday. It must include an increase in the value of the Brazil aid and the gas valley, and create a new financial aid aimed at truck drivers, as a way of mitigating the impact of high fuel prices.

The Central Bank will auction up to 15,000 traditional foreign exchange swap contracts in this trading session for the purpose of rolling over the maturity date of August 1, 2022. The BC operation helps to provide liquidity in the currency, but specialists consulted by the CNN Brasil Business point out that the body could do more to contain exchange rate volatility .

On Monday (27), the dollar closed down by 0.32%, quoted at R$ 5.235. already the Ibovespa advanced 2.12%, to 100,763.60 points.

overall feeling

Investors still maintain a 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 autarchy 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.

*With information from Reuters