Dollar exceeds R$ 5; see today’s quote – 04/19/2023 – Market

The dollar opened on a high this Wednesday (19), once again surpassing the psychological mark of R$ 5, following the appreciation of the US currency abroad, but also reflecting investors’ caution regarding details of the fiscal framework sent the day before to the Congress.

At 9:03 am (Brasília time), the spot dollar advanced 0.80%, to R$ 5.0162 in the sale. On B3, the first-maturity dollar futures contract rose 0.53%, to R$ 5.0225.

In this Wednesday’s scenario, there is the release of consumer inflation for March in the euro zone. The indicator is one of the most important for decisions on interest rates by the ECB (European Central Bank). Still on interest rates, but in the United States, investors will pay attention to the signals from the Beige Book, a report by the Fed (Federal Reserve, the American central bank) on the economic situation in the United States.

In Brazil, the highlight is the industrial production data in February, measured by the IBGE (Brazilian Institute of Geography and Statistics). The market also remains attentive to the progress and content of the new fiscal framework, which is beginning to be discussed in Congress.

The dollar, which started the day falling against the real after the release of China’s GDP (Gross Domestic Product), closed higher on Tuesday (18). According to analysts, the withdrawal of items from the spending limit rule in the new fiscal framework worries the market.

The stock market fluctuated throughout the day close to stability, and closed slightly higher with the help of Petrobras and Vale shares, after the result of Chinese economic activity in the first quarter was better than expected.

The spot commercial dollar ended the day with an increase of 0.81%, at R$ 4.976, after reaching R$ 4.99 at the maximum of the day. The Ibovespa closed up 0.14% to 106,163 points.

In futures markets, interest rates closed higher. In contracts for January 2024, the rate increased from 13.21% at the close of this Monday (17) to 13.26%. For January 2025, interest rates rose from 11.90% to 12%. For January 2027, the rate increased from 11.73% to 11.88%.

The government inserted in its proposed fiscal framework a list of more than ten items that will be left out of the new spending limit to be created from next year. The text, as reported to the Sheetremoves from the scope of the lock transfers to municipalities for the payment of the nursing floor, resources destined to agreements with precatories and contributions in state companies.

The proposal contains a series of exceptions to the rule that until now had not been announced by the government. If the proposal is approved in this way for state-owned companies, for example, the government will be able to maintain the free transfer of resources to public companies without this investment compromising the space available for other federal expenses.

In addition, the government has chosen full-year 2023 inflation to readjust the basis of the expenditure cap for 2024, adopting an option that gives extra relief for next year expenditures compared to the scenario where the indicator until the middle of the year (accumulated in 12 months) was chosen.

Until 2021, the spending ceiling predicted that the limitation would grow based on inflation accumulated in the 12 months ended in June. That year, however, the then Minister Paulo Guedes (Economy) articulated a change through a constitutional amendment to consider the period from January to December (more advantageous at the time) and make room for more spending.

The Exchange was helped by China’s performance in the first quarter. The country’s economy grew 4.5% in the first quarter of 2022, showed official data released this Monday (17). Economists polled by Reuters had expected a 4% advance.

The end of strict restrictions against Covid-19 and Beijing’s effort to accelerate growth helped the Chinese economy recover after recording one of its worst results last year.

As a result, Petrobras’ common and preferred shares closed up 2.70% and 2.50%, respectively. Vale’s ordinary rose 0.92%.

In the United States, investors reacted to statements by a director of the Fed (Federal Reserve, the American central bank) defending the continuity of the cycle of interest rate hikes to control inflation.

The results of large banks, better than expected, reduce the chance that the crisis in the sector can soften the Fed’s interest rate policy. Bank of America’s first-quarter 2023 profit beat analysts’ expectations, with revenue up 30%, the biggest advance in a decade.

On the other hand, the results of Goldman Sachs and BNY Mellon were below analysts’ expectations. Added to the factors, stock indices in New York closed close to stability.

The Dow Jones Industrial Average closed down 0.03%. The S&P 500 gained 0.09%, while the Nasdaq ended the day down 0.04%.

With Reuters