Dollar drops 1.3% and closes below R$5.50 with foreign flow and on the eve of Fed decision By Reuters


© Reuters. Banknotes of 50 reais and 10, 20 and 50 dollars 09/10/2015 REUTERS/Ricardo Moraes

SAO PAULO (Reuters) – The market closed with a significant drop on Tuesday, falling again below 5.50 reais, with local operations following throughout the day the loss of breath of the US currency abroad, amid continuous foreign to emerging flows, but with the spotlight on the US monetary policy decision on Wednesday.

The spot dollar fell 1.29%, to 5.4357 reais on sale, after oscillating between 5.523 reais (+0.29%) and 5.4285 reais (-1.43%).

On B3 (SA:), at 17:00 (Brasília time), the first maturity contract fell 0.96%, at 5.4415 reais, after rising 0.63% at the intraday high.

In evidence of the overall rally in emerging currencies, a JPMorgan (NYSE:) (SA:) index for this asset class came in late afternoon up 0.3% at session highs, after earlier retreating to lowest level in two weeks.

“There is an endless flow of foreigners to emerging markets in general,” said a manager at a large asset in São Paulo. “I think the gringo is on this ‘call’ to migrate from a developed market to an emerging one, but I think it’s not sustainable”, he pondered.

Currency somehow escaped the most tense day for other risky assets abroad, such as stock exchanges, which once again suffered from heightened tensions between Russia, Ukraine, Europe and the US.

But the main focus of the market was the US central bank (Fed), whose monetary policy meeting ends on Wednesday and at the end of which the Fed should confirm plans to raise interest rates in March and may give signs of what it intends to do. do with your balance sheet.

US interest rate hikes tend to undermine emerging assets, such as the real, but some analysts have said that much is in the price of the exchange rate.

The announces its monetary policy decision at 16:00 (GMT) on Wednesday.

Citi is more cautious about the global scenario and the impacts of the US monetary tightening on emerging markets. For strategists at the bank, headwinds – which still include an uncertain situation of the pandemic in the world, which would lead to potential risks of maintaining problems in supply chains that leave inflation high – will put pressure on the real, which supports the home view of the exchange rate of 5.60 reais per dollar at the end of 2022.

And the IMF significantly worsened its forecasts for the Brazilian economy and began to see growth of only 0.3% this year, citing consequences on demand arising from the monetary tightening underway by the Central Bank.

(By Jose de Castro)

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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