O dollar 🇧🇷USDBLR) rose against the real this Friday, after confirmation of Fernando Haddad ahead of Ministry of Finance of the elected government, but in a movement evaluated by market agents as measured, since the announcement was already widely expected, and in line with the strength of the US currency abroad.
On the spot market, the dollar gained 0.58%, at 5.2458 reais on sale.
Although it jumped up to 1.33%, at 5.2850 reais, immediately after President-elect Luiz Inácio Lula da Silva announced this Friday the first names of ministers in his government, the US currency soon lost steam and reached reduce the high to 0.03% in the early afternoon, at 5.2172 reais, in a session that had reduced volumes due to Brazil’s game in the World Cup.
“The issue of Haddad is a little more of the same thing that has been discussed: he was already being quoted, he was already in the price,” Bruno Mori, economist and financial planner at Planejar, told Reuters, noting the market’s benign reaction to the confirmation of his former partner. -Mayor of São Paulo in the future portfolio of the Treasury, with emphasis on the increase in the Ibovespa.
Around 5 pm, the reference stock index for the Brazilian market rose 0.57%, to 107,865.14 points.
João Piccioni, an analyst at Empiricus, also noticed a moderate reaction from the market to Haddad’s appointment. “We are seeing the dollar go up, but for me this level does not seem anything out of the ordinary. Maybe if we, in the next few days, see this dollar surpass the 5.40, 5.50 mark, then yes, I think there would be something local intrinsic that really caused this stress, but for now, I look at the market and I see everything very calmly.”
Mori, from Planejar, assessed that, on the one hand, Haddad has a very political profile and may be inclined to more fiscal spending, which has been worrying the markets in recent weeks. But, on the other hand, the definition of the future minister “removes uncertainties and helps to unlock some things in this transition of government”, pondered the economist, referring, among other points, to the negotiations of the PEC of the Transition.
The text of the PEC, which seeks to expand the spending ceiling by 145 billion reais for two years starting in 2023 in order to fund Bolsa Família, has already been slightly dehydrated in the Senate, and some market agents are hopeful that the proposal may be further reduced during negotiations in the Chamber, where it is currently being processed.
Piccioni, from Empiricus, added that the rise of the dollar in this session was not motivated only by the domestic agenda, and that the North American currency had already been gaining strength since the beginning of the trading session after data of inflation to the North American producer stronger than the expected.
“It’s that story: if you expect the Fed (Federal Reserve, US central bank) to continue tightening interest rates, then the dollar gains space against other global currencies. I think it’s more about this than necessarily the Haddad issue,” he said about the movement in the domestic exchange market this Friday.
In the week, the dollar advanced 0.61% against the real, and, in December, it gained almost 1%, after in November it reached the mark of 5.40 reais.
“Brazilian investors are generally discouraged about Brazil. This negativity is extreme right now,” Robin Brooks, chief economist at the Institute of International Finance (IIF) said in a Twitter post on Friday. “The view is that between fiscal stimuli and subsidized loans, Brazil is moving towards high real interest rates. Markets are starting to price it in.”
Despite noting pessimism at the domestic level, the IIF has for some time been using the “fair value” for the real, that is, the level consistent with Brazil’s economic fundamentals, at the level of 4.50 per dollar.
The US currency still loses almost 6% against the Brazilian currency in 2022, after being pressured earlier in the year by the wide interest rate differential between Brazil and other economies, as well as by the jump in commodity prices after the invasion of Ukraine by Russia.
Source: Moneytimes
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