By Fabricio de Castro
SÃO PAULO (Reuters) – After three sessions of decline, the dollar in cash closed Wednesday higher against the real, in line with the advance of the US currency abroad and the rise in Treasury rates, in a bond auction day in the United States.
The dollar in cash closed the day at 5.1492 reais on sale, up 0.40%. In April, the US currency accumulated an increase of 2.66%.
At 5:03 pm, on B3, the first maturity dollar futures contract rose 0.20%, to 5.1485 reais on sale.
The US currency fluctuated upwards against the real during practically the entire session, with investors recomposing part of their long positions (in the sense of rising prices) in the futures market after the recent declines. Abroad, the US currency also maintained gains against most other currencies.
After 11 am, the upward movement of the dollar intensified in Brazil, in the wake of the increase in Treasury yields.
Amid expectations ahead of the auction of 70 billion dollars of five-year US Treasury bonds, yields reached their highest rates of the day shortly after 11 am (Brasília time).
In the Brazilian spot market, the dollar went from a low of 5.1247 reais (-0.07%) at 9:03 am — at the beginning of the session — to a high of 5.1727 reais (+0.86%) at 11:37 am, amid rising yields ahead of the bond auction.
The maximum exchange rate of the dollar coincided with the peaks in DI rates (Interbank Deposits), also influenced by Treasuries.
In addition to the upward pressure on the dollar brought from abroad, the market was attentive to the speech by the director of Monetary Policy at the Central Bank, Gabriel Galípolo, during an event in São Paulo, about the pursuit of the 3% inflation target.
“From the point of view of the director of Monetary Policy, this is not a topic… The target is not to be discussed, it is to be pursued”, he stated, reinforcing that the discussion on the viability of the inflation target is not carried out in the Copom and it is a “non-topic”.
Galípolo also pointed out that the floating exchange rate regime in Brazil has absorbed changes in asset pricing — a phenomenon that occurs in the wake of the expectation that the Federal Reserve will promote fewer interest cuts in 2024. According to the director, the moment appears to be “ predominantly appreciation of the dollar”.
During the afternoon, the US currency settled at lower levels against the real, following the loss of strength of the US currency abroad. Even so, the dollar closed high, close to 5.15 reais.
Abroad, the currency remained high against a basket of currencies in the late afternoon. At 5:19 pm, the dollar index — which measures the performance of the US currency against a basket of six currencies — rose 0.15%, to 105.830.
In the morning, the Central Bank sold all 12,000 traditional currency swap contracts offered to roll over July maturities.
