Fall of the dollar is influenced by the US interest rate, say economists

The dollar closed this Thursday (2) quoted at R$ 5.04, lowest quotation since August 29, 2022 (R$ 5.03). Throughout the session, it fell below the level of R$ 5, last recorded almost eight months ago.

Experts heard by CNN said that this scenario, in addition to the decision of the Central Bank to maintain the Selic rate at 13.75%, is mainly due to the Federal Reserve (Fed, the Central Bank of the United States) — which raised the interest rate by 0.25 percentage points once again in the range of 4.50% to 4.75% per annum.

According to the chief economist at Órama and professor Ibmec-RJ Alexandre Espirito Santo, the dollar has been weakening because the Fed is reducing the intensity of the monetary tightening in the United States and, on the other hand, the Central Bank of Brazil is accelerating.

Fabrizio Velloni, chief economist at Frente Corretora, explains that this difference between domestic and international interest rates remains attractive to investors who want to invest in Brazil.

“The market works with expectations. So, for investors, it is attractive to opt for emerging markets. The Brazilian scenario, which already shows more control in finance, points to higher returns for investors. With that, the real appreciates”.

Velloni said that the basic interest rate decision, both in the United States and in Brazil, came as the market expected. But the surprise was due to the positions of both BC presidents.

“Jerome Powell demonstrated that the American economy is suffering a slowdown, with the creation of jobs below expectations and drawing a line of non-increase in interest rates, which may even reduce before market expectations”, highlighted Velloni.

In Brazil, he claims that the scenario has changed. “There is a concern about inflation and also about not reducing interest rates this year yet. This made investors enter Brazil, pushing the dollar rate down to R$5.00”.

political scenario

Espirito Santo said that the political scenario, mainly involving President Luiz Inácio Lula da Silva and Finance Minister Fernando Haddad, had little influence on the exchange rate issue. “They’ve been in government for just over a month, so the decisions haven’t had time to impact the exchange rate.”

However, one of the causes for the American currency to show successive falls, according to him, is the result of the return of Brazil’s protagonism in relation to environmental issues, governance and the environment.

“The country was very far from this issue, and the environment is very important in the world today. Minister Marina Silva is seen as someone who defends this issue a lot and, because of that, a lot of money is coming in and will come in even more ”, she points out.

Velloni also highlights, as an addition, the election of the president of the Chamber and of the Senate. “Both those elected showed concern and the intention to approve a tax reform, long awaited by the market for so many years”.

Is it time to buy dollar?

Regarding the purchase of the American currency, the economist and professor at the Getulio Vargas Foundation, Joelson Sampaio, says that it depends on people’s needs. “But it’s always a good strategy to have a plan for anyone who needs it. The ideal is to buy and fractionate these purchases to avoid shocks and abrupt exchange negotiations”.

Espirito Santo reinforces that it is only worth buying at this time if there is a dollar commitment. “If you have a debt, you go to study abroad, you have to send it to someone in the family, that’s fine. But, the ideal is to buy a little, because, in my opinion, the fair exchange rate is around R$ 4.85”.

On how the American currency might behave in the coming days and months, Sampaio explains that what affects the price is the interest rate scenario in the United States and, certainly, it can change with new Fed increases.

“This tends to affect our exchange rate as well. So, the expectation for the coming months is that there may be a depreciation, a devaluation, mainly due to the increase in the American interest rate”, emphasizes the FGV professor.