Dollar opens close to stability this Wednesday (20) – 12/20/2023 – Market

The dollar operates close to stability against the real at the beginning of trading this Wednesday (20). Investors are on hold awaiting inflation data from the United States scheduled for this Friday (22).

At 9:36 am (Brasília time), the dollar in cash increased 0.04%, to R$4.8655.

Yesterday, the dollar closed down 0.83%, at R$4.8631, after the release of the minutes of the Central Bank’s last monetary policy meeting, which showed a cautious Copom, and with the fall in American interest rates. S&P’s credit rating upgrade to ‘BB’ had no major impact, analysts say.

The Brazilian Stock Exchange renewed its nominal record on Tuesday (19). The Ibovespa rose 0.58%, to 131,851 points, a new closing high, according to data from the CMA. The record for maximum points during the trading session was also broken, at 132,047 points.

In real terms, however, the record is a long way off. If inflation is considered, the Ibovespa peak would be 177,098 points, when corrected by the current IPCA, and 212,305 points, when corrected by the IGP-M, both reached in May 2008, before the financial crisis. The calculations are from Economatica.

According to market agents, the improvement in S&P’s assessment was already expected and was already priced in, since it now resembles the assessment of other risk rating agencies. Therefore, it did not have much influence on this Tuesday’s trading session.

Another point of caution is that the agency said that the country’s fiscal situation is still a concern. The risk rating agency points out that the deficit in public accounts remains high and that, if public debt increases above expectations, the agency could revise Brazil’s rating downwards.

“In fact, S&P was behind other agencies, S&P’s BB rating is equivalent to Moody’s Ba2 and Fitch’s BB. I believe the event is positive, but without major repercussions because, in fact, S&P corrected the lag in relation to the rating of other agencies, to have an effect on local prices, it would have to be a revision to BB+ or a higher rating. Then, we would be facing a significant novelty”, says Nicolas Borsoi, chief economist at Nova Futura.

In its minutes, the Copom also adopted a cautious tone. The document released this Tuesday morning says that “there has been relevant disinflationary progress, in line with what was anticipated by the committee, but there is still a long way to go to anchor expectations [convergência em direção aos alvos perseguidos pelo BC] and the return of inflation to the target, which requires serenity and moderation in the conduct of monetary policy”.

In the United States, stock markets also rose. The S&P 500 index rose 0.59% and the Dow Jones rose 0.68%. The Nasdaq rises 0.66%. The movement benefits from the fall in the yield on the 10-year US Treasury bond, to 3.93%, from 3.95% in the last session.

The interest rate drop is in anticipation of new data on American inflation, which will come this Friday (22), and reflects the bet on earlier interest rate drops in the USA. If price pressures ease, the Fed (US Central Bank) may have to ease monetary policy in early 2024, which would make the dollar less attractive when compared to risky currencies with higher returns, such as the real.

(With Reuters)