February 2, 2023
The dollar remains at 5,144 Brazilian riyals amid announcements of the Lula transitional team

The dollar drops to R$5.294, after the vote on the transitional PEC was postponed

a ibovespathe main index for Stock trading brazilian (B 3), closed the day down 0.85% at 102,855.70 points. On the week, the decline was greater: 4.34%.

The stock exchange fell in the face of a negative scenario in international markets after harsh signals from central banks around the world this week, especially the Federal Reserve and the European Central Bank (ECB), while domestically there was no definition of tariffs such as the transition shadow PEC and the state-owned enterprises law in Congress .

a commercial dollar The day ended at R$ 5294, down 0.41%. During the week, the foreign currency rose by 0.92%. The market reversed the postponement of the CEC vote, initially scheduled for Thursday, but rescheduled for next Tuesday (20).

“The resistance that the agenda is facing in the chamber increases the chances of it running dry, as the future government intends to approve it later this year and Congress enters recess next week,” Levante Investments valued in a note.

The transition allows the PEC, as it came out of the Senate, to expand the spending cap by R$145 billion to pay the Bolsa Família and release the earmarked appropriations that will be canceled until the end of 2022.

The possibility that amendments to the state-owned enterprises law that would make it possible to nominate Labor Party candidate Aloisio Mercadante to head the BNDES only next year could be voted on has provided some relief to investor sentiment, Gustavo Song, senior analyst at Suno Research, told Reuters. .

The analyst also said that recent statements by future Finance Minister Fernando Haddad, that Brazil is not at a time when fiscal expansion will help the economy, contributed to easing the pressure on financial risks in recent days.

However, unlike some market participants, Song sees the barriers to approval for transition to PEC as a source of uncertainty rather than relief.

“If we had already defined (the final terms of the KCU), perhaps greater certainty could lead to market adjustment, rather than having volatility peaks,” said the specialist.

Offshore, the dollar was little changed against a basket of strong peers, as traders tried to assess the effects of monetary tightening cycles by major central banks around the world.

* With Reuters