Dollar opens lower after Copom minutes; see quotation today – 03/28/2023 – Market

The dollar opens in decline this Tuesday (28), shortly after the release of the minutes of the last Copom (Monetary Policy Committee) meeting of the Central Bank. In the document, the autarchy said that the fiscal rule to be presented by the government does not impact inflation directly, but may improve projections.

Investors were mainly on the lookout for the tone used by the monetary authority in the minutes, as the statement released shortly after the meeting was considered harsher than expected.

At 9:04 am (Brasília time), the spot dollar retreated 0.40%, to R$ 5.1869 on sale.

On B3, at 9:04 am (Brasília time), the first contract dollar futures contract fell 0.24%, to R$ 5.1920.

Investors will also pay attention to statements by Michael Barr, Vice President of Supervision at the Fed (Federal Reserve, the US central bank). He will speak to the US Congress about the health of the country’s banks.

The Stock Exchange closed higher and the dollar fell this Monday (27), with the currency returning to the level of R$ 5.20. In addition to the external scenario, with positive news about the situation of banks in the United States and Europe, the domestic environment also helped. Statements by the Minister of Planning, Simone Tebet, gave signals about the content of the new fiscal rules to be disclosed by the government.

The Ibovespa closed up 0.85%, at 99,670 points. The spot commercial dollar fell 0.80% to R$5.207.

In the interest market, rates fell, after the reduction in economists’ projections for inflation. In contracts for January 2024, interest rates dropped from 13.09% at the close of last Friday (24) to 13.03%. Upon expiry in January 2025, rates have dropped from 11.95% to 11.85%. Upon maturity in January 2027, interest dropped from 12.25% to 12.11%.

The Minister of Planning and Budget, Simone Tebet, said this Monday that the fiscal framework meets the government’s desire to zero out the public deficit. But she stressed that she cannot yet speak about future surpluses in the accounts.

“I stop at zeroing the deficit, because if we are going to have a surplus or not, that is another discussion, I cannot speak, I cannot open it”, said the minister during an event by consultancy Arko Advice.

Tebet said that the new fiscal anchor will be simple, transparent and credible, dealing with both revenues and expenses, with an eye on debt stabilization, and that the “framework” of the rule is already ready, awaiting a political decision by President Luiz Inácio Lula da Silva (PT) on its parameters.

The vice-president and minister of Development, Industry, Commerce and Services, Geraldo Alckmin, said that it is necessary to convince the Central Bank that it is not possible to have the highest interest rate in the world, in yet another criticism by the government of the conduct of the policy currency.

“We have to convince the Central Bank that it is not possible to have the highest interest rate in the world. It is a business that makes no sense at all,” said Alckmin at Enap’s Entrepreneurial Cities Awards event.

Still on the local news, the Focus Bulletin stands out. Economists now expect the IPCA to rise 5.93% in 2023, against a rate of 5.95% estimated the previous week. This was the second downward adjustment to the account for inflation after a flat reading in early March, which followed a long run of increases.

Over the course of the week, most of the attention of investors will be focused on the Central Bank. On Thursday (30), BC president Roberto Campos Neto will give a press conference when presenting the Quarterly Inflation Report.

In the United States, the First Citizens bank announced that it will acquire the deposits and loans of Silicon Valley Bank, as well as some other assets of the FDIC (Federal Deposit Insurance Corporation), an entity that guarantees deposits of bank customers in the country.

The FDIC said in a separate statement that it received rights to potential appreciation in First Citizens shares that could reach $500 million as part of the settlement.

In addition, the US authorities are considering giving additional aid to First Republic Bank, another bank in difficulty due to a rush by customers to withdraw funds.

As a result, the bank’s shares rose 11.80%, and the major players in the sector in the United States also had a positive day, with emphasis on Citigroup and Bank of America, which rose 4% and 5%, respectively.

The Fed’s top regulatory authority will tell Congress that regulators are committed to ensuring that all bank deposits are safe.

He will also say that the Fed will be prepared to use its tools for institutions of any size, if necessary, to protect the system.

Fed Supervisory Deputy Michael Barr adds that the banking system is “strong and resilient”. But he also said the US central bank was reviewing its actions before the Silicon Valley Bank collapse and assessing how to tighten banking rules going forward.

In Europe, Mario Centeno, member of the ECB (European Central Bank) and president of the Bank of Portugal, said that the European monetary authority will take into account the situation of the financial system in its next decisions on interest rates.

This Monday, Deutsche Bank stock has a partial recovery, rising more than 6% on the Frankfurt Stock Exchange, after falling 8% last Friday.

In New York, indices closed with no single direction, with technology companies giving back part of last week’s gains. The Dow Jones ended the day up 0.60% and the S&P 500 was up 0.16%. The Nasdaq index closed down 0.47%.

In Europe, the main indices closed higher. The Euro Stoxx 50 ended up 0.82%. London’s FTSE 100 and Paris’ CAC 40 rose 0.90%. Frankfurt’s DAX index closed up 1.14%.

With Reuters