The dollar closed with a significant drop of 1.53% today, approaching the level of R$5.10 at closing — its lowest value since April 11th.
Yesterday’s speech by the president of the Federal Reserve, Jerome Powell, indicating that there will be no increase in interest rates in the United States, continued to impact the market, leading to a further devaluation of the American currency abroad and a fall in Treasury rates.
Real benefits from renewed appetite for emerging currencies
The real, which generally suffers most in times of risk aversion, was the currency that benefited most from the recovery of investor interest in emerging currencies, especially Latin American ones. With the local market closed yesterday due to the Labor Day holiday, the real today reflected the external events of Wednesday, 1st.
Brazil’s rating outlook is raised by Moody’s
The change in Brazil’s rating outlook from “stable” to “positive” by the risk rating agency Moody’s also had a positive influence. This set of information opened space for a stronger correction in the currency.
Powell’s speech indicates maintenance of interest rates in the US
Jerome Powell, in his press conference, indicated that an interest rate hike in the US is “unlikely”, which contrasts with recent market expectations. The monthly employment report (payroll) in the USA, to be released tomorrow, could influence projections for the American base rate.
According to Leonardo Monoli, from Azimut Brasil, Powell did not clearly signal rate cuts this year, but highlighted that interest rates could remain at current levels “for longer”.
Foreign exchange flow
The Central Bank announced that the exchange flow in April, until the 26th, is negative at US$741 million, with an outflow of US$10.635 billion through the financial channel, exceeding the net inflow of US$9.893 billion via foreign trade. For the year, the total flow is still positive at US$4.021 billion.
Tags: Exchange rate Dollar closes sharp drop Powell rules interest rate hike
