December 6, 2022

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The dollar fell for the third time at 5.05 Brazilian real;  Stock close up

The dollar fell for the third time at 5.05 Brazilian real; Stock close up

The dollar closed again with a loss, this time by 1.07%, quoted at 5.052 Brazilian real for sale. This is the third consecutive decline of the US currency against the Brazilian real. Already IbovespaThe main index of the Brazilian Stock Exchange (b 3), finished the day 1.04% higher at 112891.80 points – thus, the monthly variance gained 0.67% and the yearly gain by 7.70%.

The dollar has not closed at 5.05 Brazilian reals since July 2, 2021, when it settled at 5.053 Brazilian reals. Compared to last week, the US currency fell by 1.71%. Compared to January, the dollar recorded a slowdown of 4.78%, and for 2021, it recorded 9.39%.

Just like yesterday, what changed the value of the currency the most was the escalation of tension between Russia and Ukraine, especially after the United States, Germany and the United Kingdom announced economic sanctions against the Russian state.

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.

International influence in Brazil

According to market professionals he interviewed UOLEconomic sanctions imposed by countries are adding to the uncertainty that already exists among companies and investors about the spread of this conflict and its effects on the global economy. And when there are doubts in the markets, strong currencies, such as the dollar, precious metals, such as gold, and even fixed-income assets from governments of more developed countries, such as US Treasuries, become more in demand than before. global investors.

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On the flip side, currencies, stocks and other assets from emerging economies, such as Brazil, are experiencing waves of sales.

Inflation, on the other hand, represents the most worrying spillover effect that the Brazilian economy may suffer due to the economic sanctions imposed on Russia, economists note. fuel And foodstuffs were one of the factors that most pressured inflation last year, and this year, they have continued to raise price indices.

Higher oil prices are speeding up fuel prices, while the higher value of wheat and fertilizer is driving up food costs here.

Favorable local scenario

The US currency has tumbled in the last six of this year’s full seven trading weeks, declining 8.7% in 2022, leaving the riyal with the best global performance so far in this period.

This good performance is seen because we “continue to attract a lot of foreign currency to the local market,” Fanny Nagem, who is in charge of the exchange desk at Terra Investments, told Reuters, citing the interest of international investors due to the local high level. Interest rates, as well as depict some opportunities in the Brazilian actions.

The greater the difference in borrowing costs between Brazil and advanced economies, such as the United States, the more attractive “carry trade” strategies that attempt to capitalize on buying currencies that offer high returns. Selec’s rate is currently at 10.75%, while interest rates in the world’s largest economy remain close to zero.

Citi strategists also cited higher commodity prices and reduced domestic political noise at the start of the year – in part due to the legislative holiday in January – as factors explaining the recent decline in the dollar’s value against the riyal.

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However, the US bank said that “risks associated with tighter monetary conditions globally and domestic financial/election risks remain on the radar, which could push the Brazilian currency to weaker levels, supporting our forecast for the US dollar at 5.54 reais until the end of 2022.” In a report on Tuesday.

(with Reuters)