With signal changes throughout the trading session, the dollar cash ended the session this Tuesday, 7th, down 0.13%, at R$ 5.0673. As on Monday, the fluctuations were modest, with a variation of just under four cents between the minimum (R$ 5.0494) and the maximum (R$ 5.0842). In the absence of relevant indicators to guide business, investors are adopting a cautious stance awaiting the decision of the Monetary Policy Committee (Copom) of the Central Bank this Wednesday, 8th.
Analysts note that the formation of exchange rate occurred under opposing forces. Signals were in favor of the real that financial aid to Rio Grande do Sul will not become a loophole for an indiscriminate increase in spending and abandonment, even if informal, of fiscal targets.
On the other hand, it exerted pressure on the dollar exchange rate in the domestic market, the strengthening of the American currency abroad, in the wake of tougher statements by the Federal Reserve leader (Fed, the US central bank).
The head of Treasury at Travelex Bank, Marcos Weigt, notes that there were no facts or indicators that could significantly affect the dollar today, which explains the modest fluctuations in the exchange rate throughout the trading session.
He sees the performance of the real still closely linked to the behavior of Treasury rates in the short term, which reflect expectations for the direction of American monetary policy.
Dollar and Copom decision
Here, Weigt believes that the Copom should reduce the pace of cuts in the Selic rate, announcing on Wednesday a reduction of 0.25 percentage points, to 10.50% per year. “Inflation expectations for next year are unanchored and rising. If the Copom cuts 0.50 percentage points, it will affect the exchange rate here. We may have a small climb. Even more so with Treasury rates pricing in just an interest rate cut in the US”, says Weigt.
In a live broadcast promoted by Warren Investimentos, the CIO and founding partner of Armor Capital, Alfredo Menezes, said that the Central Bank “would have nothing to lose” if, instead of a 0.50 point cut at this meeting, it opted for two cuts of 0.25 points in the next two collegiate meetings.
For Menezes, there has been some recent improvement in the exchange rate, after a moment of great stress, but there are issues that would justify a cautious stance on the part of the BC. Among these points of uncertainty, he cited the environmental disaster in Rio Grande do Sul, which could impact inflation and lead to more public spending.
On Monday night, the Chamber of Deputies approved a draft legislative decree on public calamity in Rio Grande do Sul and removes from the primary result target the resources that will be disbursed for the State’s recovery. It was feared that the chosen option would be a Proposed Amendment to the Constitution (PEC), an idea defended by the President of the Senate, Rodrigo Pacheco (PSD-MG) and the PT National Executive. In theory, the PEC would open up greater space for the expansion of public spending without control by the economic team.
Economist Cristiane Quartaroli, from Ouribank, states that the contained fluctuations in the dollar on Monday and Tuesday reflect the cautious stance of investors due to the uncertainties surrounding Wednesday’s Copom decision, with bets on both maintaining the pace of Selic cuts in 0.50 percentage point as in a smaller reduction of 0.25 points.
“Today we had a small drop in the dollar, but the market is quite stagnant. If the BC reduces the Selic by 0.50 points, it could be bad, initially, from the point of view of external flow. But it could have a positive impact later on with the perception of greater growth in the economy with lower interest rates”, says Quartaroli.
With Estadão Content
