The dollar fell against the real in the first trades this Wednesday (15), interrupting a sequence of seven consecutive daily gains as an external rally of the North American currency paused before the expected conclusion of the Federal Reserve’s monetary policy meeting, in which the central bank is expected to raise interest rates by 0.75 percentage point.
Investors were also awaiting the Central Bank of Brazil’s monetary policy decision, which is expected to raise the Selic rate to 13.25%, according to most market participants.
At 9:06 am (GMT), the spot dollar retreated 0.74%, to R$ 5.0959 on sale.
On B3, at 9:06 am (GMT), the first-maturity dollar futures contract dropped 0.41% to R$5.1210.
The financial market this Tuesday (14th) deepened the fall of the previous day, being dragged by the growing feeling that world inflation is out of control and will provoke a global rise in interest rates capable of putting the main economies on the brink of recession.
Reflecting the environment of aversion to risky investments, the commercial dollar rose 0.43%, to R$ 5.1350 on sale, renewing its highest quotation against the real in a month.
The Brazilian Stock Exchange reached its eighth consecutive drop. The Ibovespa index lost 0.52% in this session, ending the day with a score of 102,063, the lowest since January 6th.
The 9.19% plunge in the domestic stock market since the last rally on June 2nd is strongly related to the international scenario, although the Brazilian government has also reinforced investors’ perception of fiscal risk by putting on the agenda a fuel tax exemption proposal.
In the fifth consecutive fall of the New York Stock Exchange, the benchmark S&P 500 fell 0.38%, after having plunged 3.88% in the previous session.
The Dow Jones index, which tracks large US companies, dropped 0.50%. The Nasdaq, which is focused on midsize companies in the technology sector, rose 0.18%. The slight increase occurred, however, after a fall of almost 5% the day before.
Stress has gripped the world financial market since last Friday (10), when US inflation data came in above expectations, reinforcing the feeling that monetary authorities around the world will have to further accelerate their respective interest rates.
This situation tends to increase the value of strong currencies, especially the dollar, and withdraw investments from the shares of companies traded on the stock exchanges.
This Wednesday (15), the Fomc (monetary policy committee) of the Fed (Federal Reserve, the American central bank) will conclude its two-day meeting and inform its decision on the pace of interest rate hikes in the country.
New York market analysts are largely betting on a rise of 0.75 percentage point, according to Reuters. If confirmed, that would be the biggest increase at a Fed meeting since 1994.
This increase would raise the Fed’s benchmark rate for daily interbank lending (a benchmark for the credit industry in general) to a maximum of 1.5% per annum. This number is also the most expected among analysts consulted by the Bloomberg agency.
By continuing at this pace, the Fed could reach a rate of up to 2.5% in September and up to 3.5% in December. This would represent the most aggressive range of tightening of US monetary policy since the 1980s, according to an analysis by The Wall Street Journal.
Also this Wednesday, the Copom, the committee responsible for formulating the monetary policy of the Central Bank of Brazil, will present its decision on the country’s basic interest rate, the Selic. The increase in the cost of credit in the United States tends to affect the Brazilian rate.
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