Dollar drops to R$ 4.90 and the Stock Exchange reaches its highest value since September

The commercial dollar retreated to around R$4.90 at its lowest price this Tuesday morning (22), while the Stock Exchange’s benchmark index reached its highest score since the beginning of September last year.

Excessively undervalued shares and the possibility of gains in the commodities sector make the Bolsa do Brasil attractive to domestic and foreign investors.

Fixed income also emerges as one of the most interesting in the world. The reason for this is the ratio between the basic interest rate (Selic), currently at 11.75%, considerably above the inflation outlook for this year, which is around 6.5%.

At 12:17 pm, the American currency retreated 0.24%, to R$ 4.9320. Earlier, it had dropped to R$4.9060. The day before, the commercial dollar fell 1.45%, closing the session at R$4.9440 on sale. This was the lowest price since June 29 of last year.

This year, the real has the greatest appreciation against the American currency, when compared to other currencies of emerging countries. The spot return of the Brazilian currency is at almost 13% in the accumulated of 2022, according to data compiled by Bloomberg.

In the domestic stock market, the Ibovespa rose 0.98% to 117,302 points. If it maintains this score until the close, the main index of the Exchange will reach its highest value since the beginning of September 2021.

The finance sector was among the most valued on the stock market this Tuesday. Bradesco and Itaú banks rose 1.71% and 1.44%, respectively, exerting the greatest positive weight on the Ibovespa.

Étore Sanchez, chief economist at Ativa Investimentos, believes that the Central Bank’s statement this morning reinforces the perspective that the Selic rate will reach 13.25% in June.

Raising interest rates is the main tool at hand for a country’s monetary authority to curb inflation. By making credit more expensive, the Central Bank slows down economic activity.​

​Sanchez points out that the Central Bank’s inflation expectations consider a scenario with a barrel of Brent oil quoted at US$115 (R$ 5.71), “which attributes a hawkish bias [de elevação agressiva dos juros] for the future of monetary policy management”, he commented.

This Tuesday, the price of Brent was at US$ 115.19 (R$ 572.03), a drop of 0.37%. The day before, however, the commodity had advanced 7.12%.

Faced with Russia’s persistence in maintaining attacks on Ukraine, European Union countries are threatening to follow the United States and impose restrictions on the import of raw material produced by the Russians.

In the United States, the Dow Jones, S&P 500 and Nasdaq indexes rose 0.67%, 1.06% and 1.94%.

The hikes showed investors willing to take risks even after the president of the Fed (Federal Reserve, the American central bank), Jerome Powell, reinforced the intention of the monetary authority to accelerate the rise in interest rates so that the country tries to stop the highest inflation in four decades.