Opinion – Vinicius Torres Freire: Bolsonaro Dollar has poisoned the economy and rises again

The dollar returned to live at around R$ 5.70. If anything, December would be the most Bolsocaro month in the US currency since the beginning of the epidemic, in nominal terms (not discounting inflation). In real terms, it would be the fourth saltiest dollar in the Pocket Years.

This is yet another courtesy of the Bolsonaro-Guedes program for the destruction of the national economy, which also has the services of the center. We will not have the usual help from the appreciation of the real to contain inflation. At least, at the very least, not until the middle of next year. By then, the interest rate damage will have been done.

As any newspaper reader knows, an expensive dollar is fertilizer for inflation, among other more convoluted problems. It is the great contribution of Jair Bolsonaro and his accomplices to the famine. Yes, the price shock is global, but these people in power have placed a pineapple on the international inflationary cake, not just a bad cherry.

The Brazilian currency has devalued the most since the beginning of February 2020, since the beginning of the epidemic (among the 38 monitored by the IMF, all of which are of some relevance). The dollar was 35.5% more expensive compared to the real (on average in December this year compared to January 2020). In second place comes the Peruvian sun (22.4%). In third, the Russian ruble (19.1%). The dollar was 12.4% more expensive than the Mexican peso, in eighth place.

The problem could have been eased. In June of this year, the dollar came to cost, on average, R$ 5.03. Since then, with the help of an increase in political atrocities and cretinous electoral economic opportunism, the real has returned to devaluation. These were the months of the coup campaign that culminated in September, replaced by the fiscal coup, the kick in the stick in the spending ceiling tent and other incompetence.

The real had not been so devalued since those months between the 2002 election campaign and mid-2003, in the first year of the Lula 1 government. So, the owners of the money thought they would be expropriated, among other foolish panics or swindles. They didn’t imagine they would line their pockets with subsidized loans for mergers, acquisitions, and debt and equity profile improvements, aside from tax favors and tariff protections.

The real also lost value when considering a more accurate measure of the exchange rate, which takes into account the weighted weight of the currencies of countries with which Brazil trades and their respective inflations. It is the real effective exchange rate.

In short, the real is worthless. The prospects are not good.

The United States will start raising its benchmark interest rate in 2022. This increase should not be a big deal, but, all things being equal, it is another obstacle for the dollar to fall from the heights. Note that, even with the Selic jumping from 2% to 9.25% in nine months, there was no refreshment for the real. The owners of money abroad, Brazilians or foreigners, do not invest in the financial market here.

Exporters prefer to leave their sales revenues parked abroad, even with the real cheap — this is also fear.

Next year is an electoral campaign. Depending on the level of inconsequence, nonsense or ignorance of what candidates are going to say, the dollar could take another leap. With regard to domestic issues, the central problem is what will be done with the public debt in the coming years (how much will it grow, without or with a limit, which depends on how much the government will spend and how much it will be able to restore some economic growth).

To remember: in December 2018, just before Bolsonaro’s owned possession, the dollar was at BRL 3.89. In January 2020 before the epidemic, at R$4.15.