See the dollar exchange rate today – 06/23/2023 – Market

The dollar opened higher on Friday (23) after having remained stable in the previous session, supported by speeches by the president of the Fed (Federal Reserve, the American central bank), Jerome Powell, about possible new interest rate hikes in the United States . The currency follows the aversion to risk abroad after still tough signals from global central banks in the fight against inflation.

This Friday, the American market awaits pronouncements from more Fed officials that may reinforce bets on the future of monetary policy in the United States.

At 9:02 am (Brasília time), the spot dollar advanced 0.60%, to R$ 4.8006 in the sale. On B3, at 9:02 am (Brasília time), the first contract dollar futures contract rose 0.53%, to R$ 4.8060.

On Thursday (22), the Brazilian Stock Exchange fell and closed below 119 thousand points, after the Central Bank (BC) frustrated the market by not signaling a possible interest rate cut in August in its statement on Wednesday (21). The Ibovespa ended the day down 1.23% to 118,934 points.

The dollar closed practically stable at R$ 4.771, after having reached its lowest value of the year in the previous session. Indications that there is still room for an increase in US interest rates supported the US currency both in Brazil and abroad.

The drop in the stock market was mainly driven by companies in the consumer sector and by “small caps”, smaller companies more closely linked to the domestic economy.

The “small caps” index, for example, which has been standing out on the Stock Exchange with the projection of a drop in interest rates in the second half, fell by 1.69% in this corner, while the “Icon” index, of the consumer sector, fell 0.62%. Both bring together companies that are more sensitive to interest rates in Brazil.

All five of the most traded stocks in the session registered losses, including Vale (0.54%) and Petrobras (1.26%), which are the largest on the Exchange. The oil company suffered additional pressure from the decline in oil prices abroad and from a correction movement after strong increases in recent trading sessions.

The biggest fall of the day was that of Eztec, which fell 6.64% in a negative session for companies in the construction sector, which suffer a strong impact from the movement of interest rates in Brazil. MRV, another major representative of the sector, fell 5.04%.

In the exchange rate, the dollar rose slightly against the real throughout the day, but closed the session practically stable. The US currency advanced over other strong currencies abroad, after the chairman of the Fed (Federal Reserve, the US central bank), Jerome Powell, have indicated that there is still room for a further increase in interest rates in the US. Last week, the Fed held its first rate hike pause since March 2022.

The US currency tends to benefit from increases in US interest rates, as high rates increase the return on US fixed income, attracting resources to the country.

The real is favored by higher interest rates in Brazil, but a large part of the market believes that, even if the Central Bank begins the process of cutting the Selic rate in the near future, real interest rates will continue to be favorable to attracting investments, even more so in an environment inflation cooling. That, in turn, has helped push the dollar to its lowest levels in more than a year.

Improved prospects for fiscal policy, especially with the advancement of the fiscal framework in Congress and expectations about tax reform in the next half, also support the real.

In the United States, the main stock indices rose even after Powell’s speech. The S&P 500 and Nasdaq rose 0.37% and 0.95%, while the Dow ended the day flat.

With Reuters