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Sunday, September 25, 2022

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    Dollar closes at the lowest value since June and seeks R$ 5. Understand!

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    Dollar intensifies fall as Fed bets less aggressive after lower-than-expected inflation (Image: REUTERS/Gary Cameron)

    O dollar in sight closed down 0.8%, trading at R$ 5.08 for sale – lowest value since June -, on a positive day for risky assets after the US inflation (CPI) are lower than expected by the market. With that, the reading is that the Federal Reserve (fedthe US central bank) is expected to adopt a less aggressive (“hawkish”) stance at the next monetary policy meeting.

    The interest rate hike by 0.50 percentage point (pp), currently in the range between 2.25% and 2.50%, gained strength abroad, while the 0.75 pp bullish forecast lost steam. “It almost rules out another increase of this magnitude, of 0.75 pp”, says the economist at Ativa Investimentos, André Coelho.

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    Before the release of the CPI, the American currency reached highs above BRL 5.13, but immediately broke the BRL 5.10 level with the numbers. The session’s low was R$5.03, when there was a strong purchase of currency by importers and bank treasuries, which caused the dollar’s fall to lose strength in the final stretch of the session, comments the director of a brokerage firm exchange.

    Coelho reinforces that the dollar lost strength against the real since last week, after the meeting of the Monetary Policy Committee (Copom) of the Central Bank. He says that the Copom minutes, released yesterday, were “dovish” (soft), to the point that Ativa projected stability for the Selic rate at 13.75%. Thus, ending this month, a cycle of 12 highs in a row, started in March 2021.

    And now?

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    Amid today’s optimism about US inflation, managers at Galapagos Asset say they believe the Fed will have to raise base rates far beyond what the market prices. In the medium term, this means a still strong dollar, more volatile markets and even higher interest rates in the developed world, they comment.

    Coelho points out that the American currency should increase volatility in the next two months with the intensification of the electoral dispute. But Ativa projects an exchange rate of R$ 5.05 at the end of this year.

    The dollar futures contract maturing in September followed the movement of the spot and fell 0.8%, quoted at R$ 5.11. Outside, the Dollar Index dropped 1.10%, just above 105,200 points.

    *With Reuters

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    Source: Moneytimes

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