Dollar closes at R$5.116 after preview of inflation in Brazil; Stock market rises

The dollar closed down 0.89%, quoted at R$5.116, this Friday (26), after the release of the inflation preview in Brazil.

The Ibovespa closed with an increase of 1.51%, at 126,526.27 points. The percentage increase is the highest since April 8, when B3 rose 1.63, to 128,857.16 points.

The value of the dollar reported daily by the press, including the UOL, refers to the commercial dollar (learn more by clicking here). For those who are going to travel and need to buy currency at exchange brokers, the reference is the tourist dollar, and the value is much higher.

What happened

Market reacts to preview of inflation in Brazil. The preview lost strength again and increased 0.21% in April, compared to an increase of 0.36% recorded in March, show data released this Friday (26) by IBGE (Brazilian Institute of Geography and Statistics). The IPCA-15 rose less than expected in April, with a drop in transport costs offsetting the weight of food prices, taking the 12-month rate to below 4%.

The increase in the indicator is the lowest for April since the 0.01% deflation recorded in 2020. With the variation, the inflation preview accumulates an increase of 3.77% in the last 12 months, a result lower than that recorded for the period ending in March (4.14%). For the year, the IPCA-15 increased 1.67%. The IPCA-15 rose less than expected in April, with a drop in transport costs offsetting the weight of food prices, taking the 12-month rate to below 4%.

Lecture by the president of the Central Bank, Roberto Campos Neto, is also monitored. The president of the Central Bank, Roberto Campos Neto, said, referring to the interest rate scenario in the United States, that it is difficult to determine the trend for the dollar in the coming months. “There is no mechanical relationship between currency and interest differential. But with stronger interest rates [nos EUA] for longer, the tendency is for the dollar to become stronger”, he said, during a talk at the Scenario and Perspectives for Brazil event.

Investors react positively to US inflation data broadly in line with expectations. The PCE price index, the Fed’s (Federal Reserve) favorite for monitoring inflation, rose 0.3% last month, the US Commerce Department reported on Friday. February data has not been revised and shows a 0.3% increase in PCE. In the 12 months to March, inflation increased 2.7%, after rising 2.5% in February.

“The chance of the Fed starting to cut interest rates in September is back on the radar,” said Helena Veronese, chief economist at B. Side. The day before, stronger-than-expected PCE inflation data in the first quarter led market participants to postpone bets on the timing of the Fed’s first easing until November or even December.

“Treasury yields abroad lose steam, and the dollar usually follows”, said Fernando Bergallo, operations director at FB Capital. Ten-year Treasury rates, a global benchmark for investment, accelerated their decline after data showed that inflation in the United States rose moderately in March, in line with market expectations.

(With Estadão Conteúdo and Reuters)