After registering a drop of almost 2% in the last session, the dollar closed on Friday (10) at a high of 0.76%, quoted at R$ 5.267 on sale. With today’s performance, the US currency ends the week with gains of 1.59% against the real, after a sequence of two consecutive weekly declines.
The Ibovespa, the main index of the Brazilian Stock Exchange (B3), fell 0.93% in this trading session, ending the day at 114,285.93 points. It is the second consecutive negative week for the indicator, which totaled losses of 2.26% since Monday (6) – driven mainly by the session on Wednesday (8), a day after the acts of September 7 in support of coup agendas .
In September, the dollar registered an increase of 1.84% against the real, while the Ibovespa fell by 3.78%. The scenario is similar in 2021, with the currency accumulating gains of 1.51% and the indicator, losses of 3.98%.
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.
Despite closing high, the dollar spent most of the morning falling, reaching R$ 5.16 in the day’s low, shortly after the opening of the session. In the assessment of Luciano Rostagno, chief strategist at the Mizuho bank, this change in direction may be a reflection of market doubts about the durability of the “retreat” by President Jair Bolsonaro (no party).
Investors may be looking to adopt a cautious stance if Bolsonaro reverts to harsher rhetoric. Today is also Friday, and the market is trying not to get too positioned before the weekend.
Luciano Rostagno on Reuters
Yesterday, in “a declaration to the nation”, Bolsonaro said that he had never intended to attack any of the Powers, explaining that his words, “sometimes scathing, were the result of the heat of the moment and the clashes that always aimed at the common good”. He also stated that he was “always” willing to maintain a permanent dialogue between the Legislative and the Judiciary “for the maintenance of harmony”.
The note — whose publication made the dollar plummet and the stock market soar — came two days after the president took part in anti-democratic acts in Brasília and São Paulo. On Tuesday (7), he again made attacks on the Judiciary and even said that he would no longer comply with the decisions of Minister Alexandre de Moraes, of the STF (Supreme Federal Court), whom he called a “scoundrel”.
Volatility “has come to stay”
To Reuters, the chief strategist of Davos Investimentos, Mauro Morelli, said that even after Bolsonaro lowered the tone, “volatility is here to stay” in the market. The expectation is that the dollar will register strong fluctuations as the 2022 elections approach, even with possible increases in the economy’s basic interest rates (Selic), which tend to favor the real.
At the last meeting, on August 4, the Central Bank’s Copom (Monetary Policy Committee) raised the Selic rate by 1 percentage point to 5.25% per year, the largest rate adjustment in 18 years. It also left open the possibility of a further increase of the same magnitude at the next meeting, scheduled for the 22nd.
When the Selic rises, borrowing costs in Brazil also increase, which makes the real more attractive for carrying out a “carry trade”. This strategy consists of borrowing in a low-interest country’s currency — such as the United States, for example — and buying futures contracts in a higher-interest currency (Brazil). In this way, the investor gains from the difference between the rates.