Exchange rate: Dollar surpasses R$5 again, driven by international factors

The dollar closed up 0.74%, surpassing the R$5.01 mark, amid a context of global strengthening of the American currency. In the week, month and quarter, the American currency appreciated by 0.32%, 0.81% and 3.34%, respectively.

The move occurred in anticipation of US inflation data and Federal Reserve Chairman Jerome Powell’s speech, scheduled for tomorrow, on a day marked by markets closing due to the Passion of Christ holiday.

Factors that influenced the session

The dollar opened higher and surpassed the R$5 mark during the morning, driven by the rise in short Treasuries, which are more connected to expectations about American monetary policy. The recent emphatic stance of Fed Director Christopher Waller and US GDP growth in the last quarter of 2023 contributed to this movement.

Dollar strengthening

The global strengthening of the dollar was the main factor behind the depreciation of the real, despite local political noise. The DXY index, which measures the dollar’s performance against six strong currencies including the euro and yen, also recorded an increase of more than 3% in the first quarter. This affected not only the real, but most emerging currencies and commodity exporting countries.

Comments from the president of the Central Bank

The president of the Central Bank, Roberto Campos Neto, noted that the interest rate differential between Brazil and the USA remains high, which does not raise concerns about the exchange rate trajectory. He also highlighted the solidity of Brazil’s external accounts, with trade surpluses exceeding US$80 billion.

Exchange flow data

According to information from the Central Bank, the total foreign exchange flow until March 22 is positive at US$5.335 billion for the year, driven by the net inflow of R$11.697 billion via foreign trade, which more than offset the net outflows of US$6.362 billion in the capital account.

Expert analysis

Vanei Nagem, partner at Pronto! Invest, said that the dollar operates sideways with the market unsure about when the interest rate cut cycle will begin in the United States.

He also said that opinions differ among investors: there are those who believe in the reduction in June, others in the following meeting (July) and the most pessimistic only in next year.

“There is already a small group of people who think that the Fed will not lower interest rates in 2024, while others say the cuts will only start in July”, contextualizes Nagem.