The dollar operates with volatility, oscillating between slight highs and lows, this Tuesday (26), with investors reflecting new inflation data and the minutes of the Monetary Policy Committee (Copom) meeting, both released this morning.
The Broad Consumer Price Index 15 (IPCA-15), considered the preview of official inflation for the month, rose 0.36% in March, reported the Brazilian Institute of Geography and Statistics (IBGE), above market projections.
Furthermore, the Copom signaled in its minutes that uncertainties in the inflation scenario in the coming months prevent the committee from projecting a new cut in the Selic, the basic interest rate, in June. The document also indicated a “slower pace” of cuts in the coming months.
See below for a summary of the markets.
The previous day, the North American currency fell 0.51%, quoted at R$4.9729.
As a result, he accumulated:
- drop of 0.51% in the week;
- gain of 0.01% in the month;
- increase of 2.48% in the year.
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The day before, the index fell 0.08%, to 126,931 points.
As a result, he accumulated:
- drop of 0.08% in the week;
- decline of 1.62% in the month;
- and a drop of 5.41% in the year.
Understand what makes the dollar rise or fall
What’s moving the markets?
The day began with the release of important data in Brazil that affected investors’ sentiments at the beginning of the trading session, marked by greater volatility.
The March inflation preview, measured by the IPCA-15, was higher than analysts expected, with an increase of 0.36% against expectations of 0.32%. The increase was driven, once again, by food. The Food and beverages group registered an increase of 0.91% in the month, generating an impact of 0.19 percentage points on the general index.
Even so, the index decelerated by 0.42 pp compared to the previous month, when it increased by 0.78% in February. In March 2023, the IPCA-15 was 0.69%. In 12 months, the IPCA-15 accumulated 4.14%.
For Nicolas Borsoi, chief economist at Nova Futura Investimentos, the result shows that the IPCA-15 “not only came in above (than expected), but the opening also remains bad”,
“In the annualized three-month average, underlying services accelerated to 5.8%; in industrial, it practically dropped to zero and, in food, the indicator accelerated to 5.4%”, explains the economist.
This perspective also helps to explain another important announcement of the day: the Copom minutes. The Central Bank (BC) signaled that it should be more thoughtful with the next cuts in the Selic rate, currently at 10.75% per year, due to the uncertainties surrounding the inflation scenario.
“Some members further argued that, if prospective uncertainty remains high in the future, a slower pace of monetary easing (interest rate cuts) may prove appropriate, for any terminal rate that is desired to be achieved,” the institution said.
The Copom promoted six consecutive cuts of 0.5 percentage points in interest rates. As a result, the Selic rate fell from 13.75% per year in June last year to 10.75% per year at last week’s meeting.
Tags: Dollar operates volatility inflation preview higher expected Copom minutes Economy
