The dollar spot ended this Tuesday’s session (14) with a firm drop in the domestic foreign exchange market, in line with the global wave of weakening of the American currency.
The slightly lower-than-expected reading of consumer inflation in the United States not only consolidated the perspective that there will be no additional increase in the American base rate in December, but also fueled bets on an interest rate cut in the first half of 2024. It was the key for investors to rush to emerging exchanges and currencies.
Down since the opening of business, the spot dollar even broke the floor of R$ 4.85 in the morning, when it registered a minimum of R$ 4.8486. At the end of the day, the currency fell 0.93%, quoted at R$4.8620 – the lowest closing value since September 18th. The dollar’s losses in November are now 3.56%.
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The real, which usually stands out among emerging markets in episodes of risk appetite, this time underperformed its Latin American peers, the Mexican, Colombian and Chilean pesos. Although there may be a more defensive posture typical of the eve of a holiday, analysts attribute the shorter breath of the Brazilian currency to the increase in so-called fiscal risk.
Attention is focused on the final report of the Budget Guidelines Bill (PLDO). Deputies and senators have until Friday to propose amendments and there is a risk of abandoning the fiscal target of zero primary deficit in 2024.
“The fiscal outlook has deteriorated greatly with the government’s signs of a lack of fiscal commitment. We expect to change the target to a larger deficit during the LDO processing. It is very difficult to see the dollar below R$4.80 with this market skepticism towards the tax”, says partner and head of Foreign Exchange at Nexgen Capital, Felipe Izac.
The expert attributes the appreciation of the real this Tuesday to the global behavior of the American currency, in the wake of bets on the end of the monetary tightening cycle in the USA with the cooling of inflation.