September 26, 2023
The dollar rose 0.33% to 4.890 Brazilian reals;  The stock market fell 1.55% due to financial concerns

The dollar rose 0.33% to 4.890 Brazilian reals; The stock market fell 1.55% due to financial concerns

This Wednesday (8), the dollar rose by 0.33% and closed at 4,890 Brazilian reals. Already Ibovespathe main stock index (b 3), IThe Brazilian stock market benchmark index fell 1.55% to 108,367.67 points.

The value of the dollar revealed by newspapers daily, including UOLback to trade dollar. For those who travel and need to buy coins from exchange brokers, the value is much higher.

The Sao Paulo Stock Exchange held a session negativity weakened Because of concerns about the tax implications of the Brazilian government’s proposal to control prices fuel The bearish bias on Wall Street. Discussions about the fuel waivers remain the focus of attention, because despite the expected easing in inflation, they should lead to a significant increase in federal spending, which increases the country’s financial risks.

Foreign investors are uncomfortable with Brazil

Caio Franklin, a variable income specialist at Aplix Investimentos, said the dollar’s “sudden” rise the previous day was mainly caused by investors’ unease with the financial situation in Brazil, and said that uncertainty extended into this trading session, which could raise volatility. .

President’s government Jair Bolsonaro This week he proposed eliminating ICMS for gasoline, gas, ethanol and diesel in exchange for a reduced burden imposed by federal entities, which would be compensated by the federal government, a measure seen as an electoral measure.

We are weighed down by the fear that compensation paid to states will cause the government to breach the union’s spending cap, which would undermine the country’s already fragile fiscal credibility, and could lead to inflows of foreign capital from domestic markets, Franklin said.

The spending cap, a pillar of public accounts, was a concern for investors at the end of last year, when its rules were changed by the PEC dos Precatórios law in order to expand the government’s fiscal space.

“Foreign money loves stability,” Franklin said. “If I am going to take a risk (investing in an emerging country), I need to risk some security points, and as financial uncertainties increase, (outside agents) start making money again. The possibility of a positive real interest eventually in the states; the money goes there “.

North American scenery

The US central bank, the Federal Reserve, has already raised borrowing costs by 0.75 percentage points since March, and has indicated it will raise interest rates by 0.50 percentage points in at least each of its next two meetings. This tends to make the country’s debt – the safest in the world – more profitable, which is generally seen as a boost to the dollar.

On Friday, US inflation data will be evaluated for clues about the Fed’s next monetary policy steps, which will meet next week to set a new rate. Franklin said expectations from both the data and the central bank meeting should keep volatility in the currency markets high.

* With Reuters