By Luana Maria Benedito
SÃO PAULO (Reuters) – The dollar fell against the real this Tuesday, although it has already slowed down from the day’s lows, in line with the cooling of the US currency abroad and as markets reacted to the announcement made in the day before by the Central Bank of an extraordinary traditional currency swap auction.
At 10:20 am (Brasília time), the spot dollar fell 0.12%, to 5.0526 reais on sale, after earlier falling 0.72%, to 5.0226 reais. On B3, the first-month dollar futures contract fell 0.06%, to 5.065 reais.
In this session, the BC will sell 1 billion dollars in exchange rate swap contracts, in an operation to be carried out between 12:30 pm and 12:40 pm, which seeks to meet the demand generated by the redemption of the NTN-A3 bond, linked to the exchange rate, scheduled for April 15th.
This extra operation should not be confused with the daily swap auction that has been carried out by the BC to roll over June maturities this year. This Tuesday, from 11:30 am to 11:40 am, 16,000 swap contracts will be put up for sale for rollover.
According to Leonel Mattos, market intelligence analyst at StoneX, the auction puts downward pressure on the US currency — since the traditional swap auction is an operation with an effect equivalent to the sale of dollars on the futures market.
Meanwhile, abroad, the index that compares the dollar to a basket of strong pairs fell slightly, losing steam after earlier touching a high in five years, giving relief to the currencies of emerging countries.
Attention now turns to more U.S. data on Tuesday — manufacturing orders and job openings — as well as comments from Federal Reserve officials looking for more clues. This information will come ahead of the U.S. nonfarm job creation report for March, to be published on Friday.
Traders are pricing in a 62% chance the Fed will cut rates by 25 basis points in June, and see two more cuts in 2024, according to CMEGroup’s FedWatch tool.
The sooner the Fed reduces borrowing costs, the better for emerging currencies, which then offer more attractive returns to foreign agents compared to the interest paid to investors in the United States.
The day before, the spot dollar closed the day at 5.0588 reais on sale, up 0.86%, the highest closing value since October 13th of last year.
