O dollar fell x%, quoted at R$ 5.2xx, around xhxx this Wednesday (29), giving back part of the strong gains against the real the last few days after closing at the highest level in almost five months.
Investors operate cautiously as they await quarterly data on the US economy. United States such as Gross Domestic Product (GDP) and inflation, and before the speeches of the presidents of the central banks of the United States, Jerome Powell and the euro zone, Christine Lagarde .
The market has reacted to each data and says that it indicates the intensity and speed of the cycles of high interest rates in the world’s largest economies, leading to variations in risk aversion according to indications and readings.
In Brazil, the fiscal issue has also 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 Wednesday. 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 Tuesday (29), the dollar closed up 0.61%, at R$ 5.267. already the Ibovespa retreated 0.17%, to 100,591.41 points.
Investors still maintain a global risk aversion triggered by fears about a possible generalized economic slowdown, and even a recession, 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 China has relaxed measures to combat Covid-19, but there are fears that new restrictions will harm the world’s second-largest economy, and fiscal risk in Brazil has regained strength with an expansion of government spending.
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