See the dollar exchange rate today – 04/20/2023 – Market

The dollar opened lower this Thursday (20), the eve of a holiday in Brazil. The currency has a likely adjustment movement, but it is far from offsetting the jump of more than 2% the day before, which boosted the currency above R$ 5 and left it on track to close the week at a sharp rise, in the face of fears about the fiscal health in Brazil.

At 9:23 am (Brasília time), the spot commercial dollar retreated 0.17%, to R$ 5.0772 in the sale. On B3, the first contract futures contract rose 0.02%, to R$ 5.0840.

Investors are keeping an eye out for the CMN (National Monetary Council) meeting, even with the expectation that there will be no discussions on the inflation target.

In the United States, the weekly data on unemployment insurance claims are released, which are gaining importance at a time when the market is trying to anticipate the stance of the Fed (Federal Reserve, the American central bank) in the next meetings on interest rates. Some members of the monetary authority have speeches scheduled for this Thursday.

The Stock Exchange began the day in a downward trend, and the movement only increased in the final part of the trading session this Wednesday (19). When analyzing the details of the new fiscal framework, presented this Tuesday (18) by the government to Congress, economists claim that the targets depend a lot on revenue, and the statements by the BC (Central Bank) president on interest brought the perception of great difficulty in implementing the proposal.

The Ibovespa closed the day down 2.12%, at 103,912 points. The spot commercial dollar rose 2.174%, to R$5.084, returning to the same level seen in early April.

In futures markets, the upward trend seen since the beginning of the week was accentuated on Wednesday. Upon maturity in January 2025, the rate increased from 11.98% to 12.11%. For January 2027, interest rates rose from 11.82% to 12.07%. When due in January 2029, the rate increased from 12.13% to 12.42%.

Interest rates react more directly to the BC president’s speeches in London. Campos Neto said that core inflation in Brazil is very resilient and, although the full figure is falling, price increases should regain strength in the second half. He claims that it is necessary to persist in the battle against inflation, which has not yet been won.

Speaking to investors, Campos Neto said he had not yet read in detail the text of the fiscal framework project sent by the government to Congress the day before, but reiterated that the proposal is “quite reasonable” and that it will be important to monitor the approval process.

“We are watching to see the effects of what the government presented”, he said, emphasizing once again that there is no mechanical relationship between the fiscal target and the BC’s decisions on interest rates, and that the most important thing is how the policies for the accounts public policies affect the channel of expectations of economic agents.

“The reality is that the disinflation process is slower than we expected given the level of real interest rates in Brazil. Which tells us that the battle has not been won and we need to persist”, he said, in a meeting organized by the European Economics & Financial Center .

Vale’s shares contributed to the poor performance of the Ibovespa this Wednesday. The mining company announced the production of 66.77 million tons of iron ore in the first quarter of this year, up 5.8% compared to the same period in 2022. But sales fell by more than 10% in the period, compared to the first quarter from 2022.

Together, Petrobras, Vale and steel companies represent more than 30% of the index. Vale’s common stock alone has 15% of weight, and closed down 2.92%. Petrobras’ common and preferred shares dropped 3.21% and 3.19%, respectively.

In addition to internal news, the dollar also reacted to the perception of interest rate policy in the United States. After the accumulated fall last week, with the deceleration of inflation in Brazil, the perspective that American prices are still far from the target and the removal of fears of a banking crisis are starting to reverse the scenario.

According to analysts, the prospect of high interest rates for longer in the United States increases demand for the country’s bonds, considered the safest in the world, which ends up appreciating the American currency.

In the United States, stock markets closed closer to stability. Investors remain attentive to the balance sheets of US banks. Morgan Stanley reported a 20% drop in net revenues in the first quarter of 2023, driven mainly by the investment area.

This Wednesday afternoon, the Fed (Federal Reserve, US central bank) released the Beige Book, the monetary authority’s report on the economic situation in the US. The monetary authority reports that the country’s general activity has had little change in recent weeks, and that prices have slowed down, but continue to show moderate increases, according to the Bloomberg agency.

The Dow Jones Industrial Average closed down 0.23%. The S&P 500 ended the day down 0.01%, and the Nasdaq was up 0.03%.

With Reuters