By Fabricio de Castro
SÃO PAULO (Reuters) – The dollar closed sharply lower against the real this Thursday, with prices reacting, on the return from the holiday, to the Federal Reserve’s monetary policy messages and to Moody’s decision to improve the rating outlook for Brazil’s credit.
The US currency in cash closed the day at 5.1135 reais on sale, down 1.53%. It was the biggest percentage drop in a single day since August 23 of last year, when it dropped 1.63%. On November 3 last year, the dollar had also fallen 1.53%.
At 5:14 pm, on B3, the first maturity dollar futures contract fell 1.72%, to 5.1275 reais on sale.
On Wednesday, with markets closed in Brazil due to Labor Day, the Fed maintained interest rates in the range of 5.25% to 5.50% and signaled that it was still inclined to possible reductions in borrowing costs. in the USA — news that weighed on the North American interest curve the day before and which, in theory, is unfavorable to the dollar.
Additionally, Moody’s reaffirmed Brazil’s credit rating at Ba2 on Wednesday, but changed the country’s outlook from “stable” to “positive”, citing a more robust GDP and continued — albeit gradual — progress. — toward fiscal consolidation.
In the foreign exchange market, Moody’s action was considered favorable to the real (unfavorable to the dollar), as the country could become, in the future, with an eventual return to investment grade, more attractive to foreign capital.
Thus, these two factors — the Fed and Moody’s — weighed on dollar prices when the Brazilian market reopened this Thursday.
“I attribute the fall of the dollar today (Thursday) more to abroad. As we didn’t have a market yesterday, when business resumed the dollar already gave way”, commented Matheus Massote, foreign exchange specialist at One Investimentos. “And we had Moody’s, which is obviously important,” he added.
In fact, after registering a maximum price of 5.1944 reais (+0.03%) in the first minute of the session, at 9 am, the spot dollar plummeted in Brazil.
The downward movement continued in the morning and afternoon, with the spot currency reaching a minimum price of 5.1000 reais (-1.79%) at 2:47 pm.
From the level of 5.1000 reais — considered by several professionals interviewed by Reuters in recent weeks as a kind of oscillation “floor” for the dollar after the most recent global repricing movement — the dollar regained some strength , but it still closed with a firm fall.
In the morning, attention was also drawn to the strong numbers on the Brazilian balance of payments, released by the Central Bank.
The country had a current account deficit of 4.579 billion dollars in March, worse than the negative balance of 3.1 billion dollars projected by market economists. However, Direct Investment in the Country (IDP) reached 9.591 billion dollars, against 6.85 billion dollars projected in the Reuters survey. In practice, the IDP more than covered the current account deficit.
In the first quarter, the deficit in transactions was 14.4 billion dollars, but 23.3 billion dollars entered the country via IDP.
Also in the morning, the BC sold all 12,000 traditional currency swap contracts offered to roll over July maturities.
At 5:38 pm, the dollar index — which measures the performance of the US currency against a basket of six currencies — fell 0.30%, to 105.390.
