Dollar goes above BRL 5.40 on persistent global caution

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The dollar advanced shortly after opening on Wednesday (28), operating comfortably above R$5.40, as investors around the world continued their search for safety amid persistent fears that interest rate hikes too aggressive in major economies lead to a global recession.

In Brazil, the approach of Sunday’s presidential elections contributed to caution.

At 9:02 am (GMT), the spot dollar advanced 0.70%, at R$ 5.4151 on sale.

On B3, the first-maturity dollar futures contract rose 0.64% to R$5.4190.

This Tuesday (27), negotiations in the financial market ended once again demonstrating the concern of investors with the course of the world inflation crisis.

In Brazil, the commercial dollar closed with a slight increase of 0.03%, quoted at R$ 5.3780, after having shot up almost 2.5% the day before. On the Stock Exchange, the Ibovespa parameter index dropped 0.68%, to 108,376 points. It is the third consecutive drop of the indicator, but it still accumulates a high of 3.4% this year.

Domestic investors even showed optimism earlier in the day in the face of a lower-than-expected IPCA-15 (official inflation preview) in September and the minutes of the Central Bank’s monetary policy meeting that only confirmed the maintenance of the basic rate. interest rate at 13.75% for a long period.

Turbulence from abroad, however, weighed on the closing of the domestic market after Fed officials (Federal Reserve, the American central bank) reaffirmed their intention to raise interest rates.

Neel Kashkari, chairman of the Minneapolis Federal Reserve, reinforced in an interview with The Wall Street Journal that “the tightening [alta dos juros] is in the plans” to curb inflation and acknowledged that there is a risk that the central bank will go overboard.

Economists and analysts generally agree that raising interest rates is an important measure to contain inflation, as uncontrolled prices have a devastating effect on the economy. It is the risk of exaggeration, however, that scares the market, as it can drive the world into a recession.

Abroad, the pound sterling fell again against the dollar, remaining at the lowest level since 1985. The British currency closed at US$ 1.0687.

The pound has been falling more sharply this week due to the backlash from the biggest tax cut package in 50 years, announced last week. In addition to revealing the government’s concern about the possibility of a recession, the measure goes against the monetary policy of the country’s central bank.

On the New York Stock Exchange, the benchmark S&P 500 index fell 0.21% on Tuesday. The Dow Jones, an indicator that tracks the shares of 30 of the largest companies in the country, dropped 0.43% and renewed the minimum score for the year (29,134 points).

With a cumulative annual drop of 19.82% this year, the Dow Jones is close to the so-called “bear market”, the bear market, in reference to the animal whose paw knocks down what lies ahead. The term is used to define an annual decline of 20% or more.

When stocks go up, the reference animal is the bull, which throws up everything it attacks. It’s the bull market.

This is a time when investors prefer to pull dollars from riskier investments, such as equity markets and investments in emerging countries, to seek protection in US Treasuries.

In addition to insurance, US sovereign bonds are even more attractive in view of the prospect of continuing credit rate increases in the country. The average yield to maturity of ten-year bonds, a benchmark for the US interest rate market, is close to 4% and has been renewing highs.

The move makes the US currency scarcer and more expensive in other parts of the world.

Last week, the Fed (Federal Reserve, the US central bank) confirmed the third straight rise of 0.75 percentage point in the cost of credit, showing no signs that the battle against inflation is nearing an end.

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