The dollar jumped against the real shortly after the opening of this Monday (21), with the increase in political tensions in Brazil in the final stretch of the presidential election, exacerbating the search for the US currency seen abroad.
At 9:07 am (Brasilia time), the spot dollar advanced 1.58%, at R$ 5.23 on sale.
In this session, the Central Bank will auction up to 16 thousand traditional foreign exchange swap contracts for the purpose of rolling over the maturity date of November 1, 2022.
Last Friday (21), the spot commercial dollar dropped 1.34%, quoted at R$ 5.1480. As a result, the American currency lost 3.36% in value against the real in the week.
Also last week, the Brazilian stock market accumulated a rise of 7%, the highest since November 2020, surpassing the also strong weekly gains made by benchmark indexes abroad.
On Friday, the Ibovespa rose 2.35% to 119,928 points. With this result, the stock exchange’s parameter indicator started to deliver a return of 14.4% in 2022.
The common and preferred shares of state-owned Petrobras rose 3.4% on the day and, as a result, reached an annual high of around 90%. The prices of BRL 41.56 (PETR3) and BRL 37.72 (PTR4) are the highest values ​​for these assets in the historical record available on the B3 website, the Brazilian Stock Exchange, which has been tracking since 2000.
In addition to one-off gains from the appreciation of important raw materials for Brazilian exporters and the reduction of concerns about rising interest rates abroad, analysts attributed the domestic result to investor sentiment with polls that, one week before second round of the presidential election, show the rapprochement between candidates Jair Bolsonaro (PL) and Luiz Inácio Lula da Silva (PT).
“I think that the Brazilian market is reflecting the external environment together with the local one, with the election increasingly evident in asset prices”, said Nicolas Farto, specialist in variable income at the consultancy Renova Invest.
“Some at Faria Lima comment on the rapprochement between President Bolsonaro and former President Lula and this seems to be what is contributing the most,” commented Farto.
The political scenario showing Bolsonaro’s evolution brought a very strong buyer movement of sectors of the stock exchange that concentrate state-owned companies because “privatization is part of Bolsonaro’s government plan”, said Victor Paganini, an analyst at Quantzed. “The market understands that it is interesting for these companies to be privatized.”
On Thursday (20), analysts also said that companies benefited from the assessment by investors that Bolsonaro, whose vision is considered more in line with the market, now has a chance of winning the second round after the disclosure, on Wednesday. (19), from the most recent Datafolha survey.
Lula was ahead of Bolsonaro, scoring 49% of the total votes, compared to 45% for his rival. Candidates therefore tie at the plus or minus two percentage point margin of error. Blanks and nulls add up to 4% and undecided, 1%.
In the poll carried out last week, PT scored 49% of the total votes and the current president, 44%.
Camila Abdelmalack, chief economist at Veedha Investimentos, pointed out, however, that the fall in the dollar and the positive reaction of the stock markets also has a consistent relationship with softer speeches by members of the Fed (Federal Reserve, the American central bank) about the need to continue raising interest rates. “Investors continue to monitor these speeches and calibrate their bets on the future of the interest rate.”
Mary Daly, chairman of the Federal Reserve Bank of San Francisco, said on Friday that the central bank needs to avoid sustaining too sharp interest rate hikes and thus prevent a sharp contraction of the US economy.
In New York, the S&P 500 parameter indicator advanced 2.37% on the day and 4.74% on the week. Dow Jones and Nasdaq ended with weekly gains of 4.89% and 5.22%.
There, relatively positive quarterly balance sheet results also momentarily motivate investments in a market that has fallen by around 20% this year due to the policy of raising interest rates to contain inflation.
with Reuters
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