Dollar falls against real after Lula’s conciliatory tone

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The dollar had a slight drop against the real in the first trades this Monday (21), despite the strength of the US currency abroad, with investors reacting positively to recent more conciliatory speeches by president-elect Luiz Inácio Lula da Silva about the future Brazil’s fiscal stance.

At 9:10 am (Brasília time), the dollar in sight retreated 0.36%, to R$ 5.35 in the sale. On B3, at 9:10 am (Brasília time), the first contract dollar futures contract fell 0.34%, at R$ 5.37.

Last week, the dollar closed with a weekly high of 0.99%, while the country’s Stock Exchange suffered a low of 3%.

Revealing that the market expects more inflation in the face of pressure for public spending, the DI interest rate (interbank deposits) for 2024, a reference for short-term credit, rose for the third consecutive day, reaching close to 14.4% per year .

Criticism by President-elect Luiz Inácio Lula da Silva (PT) of the rule limiting public spending brought turmoil to business.

Lula defended, on Thursday (17th), during a speech at COP27, breaching the spending ceiling in order to finance social programs.

“If I say that, will the stock market fall, will the dollar rise? Patience,” said Lula at the UN climate conference taking place in Sharm el-Sheikh, Egypt. The petista also stated that the fluctuation of indices does not happen “because of serious people, but because of speculators who are speculating every single day.”

Market participants are already discussing the possibility that the basic interest rate could advance to 15% next year, depending on the course of the fiscal debate, according to Rafael Marques, economist at Philos Invest.

Part of the market, however, has the possibility that the Transition PEC, which increases spending, will be cut in Congress.

Sources involved in the PEC negotiations heard by the Reuters agency said that allies of the new government admit that they will have to give in during the text negotiations and define a deadline for the exception to the ceiling so that the proposal advances in time to be enacted by Congress later this year.

In a nod from the new government to fiscal responsibility, former minister Aloizio Mercadante, who coordinates the technical groups for the transition of government, indicated that tax exemptions are under analysis and that this could be a way to raise future revenues for the federal administration, without increase in the tax burden.

The vice president-elect, Geraldo Alckmin (PSB), said on Thursday that the market’s reaction to the Transition PEC is momentary and will be overcome, and guaranteed that the Lula government will discuss a new fiscal framework over time.

With Reuters

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