Dollar soars and Ibovespa plummets after coup acts

After a beginning of the month without major movements, the dollar soared 2.89% this Wednesday (8) and closed the session quoted at BRL 5.326 on sale — the highest value in more than two weeks, since August 23, when the American currency reached R$5.382.

The Ibovespa, the main index of the Brazilian Stock Exchange (B3), plunged 3.78% today, ending the day at 113,412.84 points. It is the biggest daily percentage loss since March 8 (-3.98%) and the lowest level reached since March 24 (112,064.19 points).

With today’s performances, the dollar now accumulates a high of 2.98% in September, while the Ibovespa has a sharp fall of 4.52%. In 2021, the trend is similar, with gains of 2.65% for the US currency and losses of 4.71% for the indicator.

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.

Reaction to September 7th

Investors operated today with heightened caution after new attacks by President Jair Bolsonaro (no party) on the STF (Supreme Federal Court), made during acts of an undemocratic character and coup on 7 September.

Yesterday morning, in Brasília, Bolsonaro threatened the president of the STF, Luiz Fux; in the afternoon, in São Paulo, he openly declared that he would not respect “any decision” of Minister Alexandre de Moraes, inciting his supporters against members of the Judiciary. The president also called Moraes a “scoundrel” and asked him to leave in front of about 125,000 people on Avenida Paulista, according to the Military Police.

In the evaluation of jurists consulted by the UOL, by saying that he will disrespect eventual decisions of the Supreme Court, Bolsonaro commits a crime of responsibility – which, in theory, could motivate the opening of an impeachment process against the president.

market is pessimistic

In the market, according to specialists consulted by Reuters, the assessment is that the level of risk is now higher, with “decent” reforms practically unfeasible, a higher chance of the “bomb” of precatório (judicial debts of the Union) exploding and preservation of the spending ceiling becoming the Bolsonaro government’s only credible economic goal.

[Bolsonaro] stretched the rope too much. In my view, the government has already lost all ability to make decent reforms. Now, the less you do and spend time on it, the better.
Joaquim Kokudai, manager at JPP capital

At the same time, with the electoral atmosphere taking over the government’s agenda, analysts seem to surrender to the idea that the goal now is to avoid more severe disruptions in the scenario. There are even doubts whether the leaders of the economic team — Paulo Guedes (minister of the economy) and Roberto Campos Neto (president of the Central Bank) — could contain any of Bolsonaro’s spending rage.

“From the latest speeches, it seems that Campos Neto and Guedes are much more aligned to make the government’s intentions viable than to contain them,” Carlos Duarte, from Planejar, told Reuters. “The market today accepts Guedes much more out of fear of who would come after than out of expectations of the minister’s achievements. It’s more because of the idea that he is someone who seeks to fill the gaps in the game.”

Now, according to Victor Scalet, macro strategist at XP, investors are left to wait for the next developments. Any sign of relief on the fiscal front, he pointed out, could give Brazilian markets a break.

“But it is necessary to have the precatory orders forwarded, to know how spending on Bolsa Família will be next year and to see if the ceiling will remain up,” he stressed to Reuters.

(With Reuters)