Ibovespa drops 1.73%, the biggest daily loss of the month; dollar goes from R$ 5.25

After two hikes, the Ibovespa dropped by 1.73% today, ending the day at 118,723.97 points. It is the biggest daily loss since July 30, when the main Brazilian Stock Exchange index (B3) plummeted 3.08%.

Now, the indicator accumulates a devaluation of 2.53% in August, which is heading to be the second consecutive negative month for the Ibovespa.

The dollar rose again, after amending four consecutive lows, and closed on Thursday (26) quoted at R$ 5,257 on sale, up 0.87% compared to yesterday. In August, the American currency already adds 0.90% gains against the real.

In the year, the Ibovespa and the dollar are going in opposite directions: while the indicator registers a drop of 0.25%, the currency has already risen 1.31 in the year.

The dollar value reported daily by the press, including the UOL, refers to the commercial dollar. For those who are traveling and need to buy currency from exchange brokers, the value is much higher.

Fed influenced market

The performance of the dollar reflects investors’ expectations by the speech of the president of the Fed (Federal Reserve, the Central Bank of the United States), Jerome Powell, which takes place tomorrow and may offer clues about when the stimulus to the American economy will be reduced.

Earlier, Dallas Fed President Robert Kaplan told CNBC that, by September, the US Central Bank will be in a position to announce the start of tapering off bond purchases (in English, “tapering”). This cut, he added, could begin to be carried out “in October or shortly thereafter”.

Also to CNBC, the president of the Fed of St. Louis, James Bullard, also said that the monetary authority is “uniting” around a plan to start reducing the stimulus.

We will be able to reach a good consensus in the committee and a good deceleration process. Looks like we’re coming together around a plan.
James Bullard of the St. Louis Fed

political tension remains

In Brazil, the political-institutional tension is unrelenting, with President Jair Bolsonaro (no party) criticizing the decision of Senate President Rodrigo Pacheco (DEM-MG) to reject the impeachment request against Minister Alexandre de Moraes, of the STF (Supreme Federal Court). (Watch below)

The water crisis in the country is also worrying, Álvaro Bandeira, chief economist of the digital bank Modalmais, told Reuters — in particular, the effect on inflation of potential increases in electricity prices.

Yesterday, data released by the IBGE (Brazilian Institute of Geography and Statistics) showed that energy pressure led Brazil’s official inflation forecast to soar to 0.89%, the highest level for August in almost two decades.

(With Estadão Content and Reuters)