After appreciation in April, what to expect from the US currency?

April brought turmoil to the currency market – not only in Brazil, but also in the main economies around the world. The quotation of dollar against the real it left the range between R$4.90 and R$5.05, in which it remained during March, and came close to R$5.30. According to analysts, some factors played in favor of the appreciation of the North American currency, both in the external and domestic panorama. The scenario ahead is still uncertain. Check out the variables that have been closely analyzed by experts.

Interest rates in the US help to increase the value of the dollar

If expectations were in December 2023 that the start of the US monetary easing cycle was close, this euphoria quickly changed at the beginning of the year. But at the end of March, the scenario became even more blurred.

“The main brand was the CPI [indicador de inflação ao consumidor] well above expectations, followed by the retail index also above. This was enough for the market to recalibrate cut expectations”, says Danilo Igliori, chief economist at Nomad.

The new data raised doubts not only about when the cut will begin, but also about the magnitude of the interest rate reduction this year.

“The inflationary period is taking a long time to pass in the USA, and the USA exports inflation to the rest of the world”, says Henrique Lucena, responsible for Arton’s offshore accounts.

With the Fed taking longer to cut interest rates, the dollar tends to appreciate, as investors prefer to invest their resources in US treasury bonds, rather than in emerging countries.

Middle East brings uncertainty

Another factor that favored the appreciation of the dollar in recent weeks was the increase in tensions in the Middle East, with attacks between Israel and Iran.

The risk of an escalation in the conflict, says Iglioril, raises concerns about the global oil supply (although the scenario currently does not show major restrictions), and the interruption or difficulties in trade. “In addition, the perception of risk itself increases, and investment decisions begin to incorporate this and participants tend to become more defensive, looking to protect positions,” he explains.

Finally, the domestic factor that weighed against the real was the change in the fiscal result target, announced by the government in April.

“It’s not just the fiscal issue, the perception is that the government’s relationship with Congress is worse,” says Nomad’s chief economist.

“The result in itself is bad, because it puts extra pressure on 2025, already knowing that declared goals would be difficult to achieve”, says Igliori. “But the change itself is worse.”

And now, what to expect from the dollar?

“Volatility is certainty. It will be very surprising if we have a moment of stability between R$5.10 and R$5.15”, says Igliori. However, he considers that, for the dollar to have a new round of appreciation, “a very large stress” is necessary in one of the three variables above.

“Currency is one of the most difficult instruments to forecast. I think that [os investidores] they must have a percentage of their assets in hard currency”, says Lucena, from Arton.