Exchange rate: Dollar surpasses R$4.90 again on a bad day for emerging currencies and oil

After five consecutive sessions of decline, in which it accumulated a devaluation of 3.40%, the dollar in cash rose in the session this Wednesday, 8th, and closed again above the level of R$ 4.90. According to operators, the risk-averse external environment, with losses in emerging currencies, opened space for a profit-taking movement in the domestic market.

Although with less weight in the formation of the exchange rate, it also played against the real certain discomfort with the domestic fiscal framework, following the larger than expected deficit of the consolidated public sector in September.

With a minimum of R$4.8720 and a maximum of R$4.9170, in the afternoon, the spot dollar closed up 0.66%, quoted at R$4.9071. Despite the rebound today, the currency is down 2.66% for the month. The real’s slide occurred in an environment of very moderate liquidity in the foreign exchange futures market. This suggests that there is no trend reversal or relevant change in investor positioning.

The most anticipated event of the day, the participation of the president of the Federal Reserve, Jerome Powell, in a conference today in Washington did not bring signs that could guide business. In his speech, the chairman did not comment on the conduct of monetary policy. There was an expectation that Powell could reinforce the milder tone of the American Central Bank’s statement last week, in contrast to tougher statements from other Fed members in recent days.

Outside, the DXY index operated, at the end of the afternoon, between a slight increase and stability. The American currency rose compared to most emerging currencies and commodity exporting countries. Among Latin American real pairs, the Chilean and Colombian pesos suffered the most significant losses, above 2%. Oil prices fell, with the Brent contract breaking the US$80 floor for the first time since July.

“The dollar has depreciated a lot in recent days, down to R$4.90, mainly with the Fed’s dovish tone last week. Today, we have a normal movement of realization and adjustments with a more negative external environment”, says partner and head of foreign exchange at Nexgen Capital, Felipe Izac, adding that the recent fall in the American currency brought more importers to the market, which helps to explain the exchange rate behavior today.

Here, attention continues to focus on the likely vote on tax reform in the first round in the Senate today and the debate surrounding the possible change in the 2024 fiscal target. After meeting with party leaders at the official residence of the president of the Chamber, Arthur Lira ( PP-AL), the Minister of Finance, Fernando Haddad, said he was confident in the approval this year of the regulation of ICMS subsidies – one of the economic team’s measures to increase federal revenue and, with this, try to eliminate the account deficit public in 2024.

At an event in New York in the afternoon, the president of the Central Bank, Roberto Campos Neto, praised Haddad’s work and said that the cost of changing the 2024 fiscal target would outweigh any potential benefits by increasing uncertainty and, as a result, premiums. risk. According to Campos Neto, the change in target could be interpreted by investors as an “abandonment” of the new fiscal framework. The BC president highlighted that, given the high interest rates in developed countries, emerging countries have to do their “homework” to deal with an environment of more restricted liquidity.