Dollar falls with market waiting for statements by Campos Neto and meeting on inflation target

The dollar firmed a fall against the real on Monday (13) with an empty agenda, with investors awaiting the first meeting of the new government of the CMN (National Monetary Council) and an interview with the president of the Central Bank, Roberto Campos Neto, amid to speculation about a possible change in the country’s inflation targets.

At 9:53 am (Brasília time), the spot dollar was down 0.41%, at R$5.1994 on sale, accelerating its losses after opening close to stability. According to market participants, the real was benefiting from the session’s weak economic indicators agenda.

On the B3, the dollar futures of the first month retreated 0.25%, to R$ 5.2190.

The meeting of the CMN, the body responsible for defining the official inflation targets, is scheduled for Thursday (15). The meeting will come after news that the government’s economic team is studying to anticipate a review of the country’s inflation targets and possibly raise the target to be sought by the Central Bank, with rumors that the president of the autarchy, Campos Neto, would accept the change.

Although the country’s official inflation targets are commonly defined at the June meeting of the CMN, nothing prevents the objectives from being changed at this week’s meeting.

If the Central Bank agrees to changes on Thursday, investors could interpret this as weakness in the face of pressure from the government of President Luiz Inácio Lula da Silva, who has formed an insistent chorus to complain about the high level of the Selic rate, currently at 13 .75%, and to question the autonomy of the autarchy.

Amid some nervousness in the market before the meeting, Campos Neto will give an interview to the program Roda Viva, on TV Cultura, which will air from 10 pm this Monday. Banco Inter said in a note that the market awaits “your comments on Lula’s recent attacks on him and on Bacen”.

Meanwhile, abroad, the dollar alternated stability and a slight drop against a basket of strong peers, with investors from all over the world waiting for a reading of North American inflation forecast for Tuesday, which may offer more clues about the trajectory of Federal Reserve monetary tightening.

“Stronger data could trigger a new round of appreciation of the dollar and, consequently, devaluation of other emerging currencies”, warned Victor Candido, chief economist at RPS Capital. This is because inflation still under pressure in the US would justify further interest rate hikes by the Fed, which would tend to attract funds to the US fixed income market, increasing the demand for dollars.

In the last session, on Friday (10), the spot US currency fell 0.98%, to R$ 5.2220 on sale, the biggest daily percentage drop since January 25 (-1.21%).