Follow the dollar and the Stock Exchange this Thursday – 02/09/2023 – Market

The dollar fell against the real shortly after opening this Thursday (9), in line with the international movement and reflecting expectations that tensions between the Brazilian government and the Central Bank will cool down in the coming days, during the visit of President Luiz Inácio Lula da Silva to the United States.

Meanwhile, investors digested the slightly lower-than-expected January IPCA reading.

At 9:14 am (Brasília time), the spot dollar retreated 0.19%, to R$ 5.1870 in the sale.

On B3, at 9:14 am (Brasília time), the first contract dollar futures contract fell 0.34%, at R$ 5.2020.

The Stock Exchange closed up 1.97%, at 109,951 points, boosted by bank shares, especially Itaú Unibanco. The news that there are ministers advising Lula to lower the temperature in the confrontation with BC helped in the rise.

“The proposal to overthrow the independence of the Central Bank does not have the strength to pass with the Lira [presidente da Câmara] not in the Senate. This ended up helping the stock exchange boost and not reverse all the gains it had on the day”, says Gabriel Meira, a specialist at Valor Investimentos.

In general, a high Selic rate tends to benefit the real by making it more attractive for use in investment strategies that seek to profit from interest rate differentials between economies. However, the longer interest rates stay high, the more they tend to harm the country’s economic activity, a factor that is also taken into account by foreign investors when building their portfolios.

For Stefany Oliveira, analyst at Toro Investimentos, there is still hope of anchoring Brazilian assets even amid the recent tension between the government and BC.

“Sometimes foreign investors continue to invest money in Brazil because they see these movements [políticos] more like noises than facts. While this goes on, we will continue to see the foreign holding the performance of both the real and the Ibovespa. We’re going to depend a lot on that for the dollar to keep fighting below the 5.30 level,” she told Reuters.

But, “if at some point the ‘gringo’ starts to see this [críticas de Lula à independência do BC] as something concrete, it will be much more harmful for our exchange rate”, he added.

with Reuters