Exchange rate: Dollar closes higher with cautious investors ahead of Copom decision

The dollar closed up 0.47%, quoted at R$5.09. The currency reflected, throughout the session, the wait for the Monetary Policy Committee (Copom) decision on the Selic (base interest rate), which takes place early this evening.

“Everything indicates that the cut will be 0.25 percentage points (pp). As encouraging as the recent data from the United States is, what happened in Rio Grande do Sul could generate an increase in food prices in the next semester, in addition to the fiscal risk scenario”, explains the partner at Ethimos Investimentos Lucas Brigato.

Dollar movement

During the trading session, the spot dollar registered a minimum of R$5.0769 and a maximum of R$5.1080, ending the day with an increase of 0.47%, quoted at R$5.0913. In the first five sessions of May, the currency accumulated losses of 1.95%.

Liquidity was moderate, indicating a cautious stance on the part of treasuries. The dollar futures contract for June moved just over US$10 billion, being an important barometer of the appetite for liquidity.

International scene

Abroad, the DXY index, which assesses the dollar’s performance in relation to a basket of six strong currencies, registered a slight increase, while Treasury rates continued to rise. The return on the 10-year T-note approached 4.50%, on a day that featured a US$42 billion auction, with demand in line with the recent average.

Investors in the US followed statements from Federal Reserve officials, notably Susan Colin, president of the Boston Federal Reserve, who warned of the risk of premature cuts in the basic interest rate.

Expectations for the Copom decision

Economists point out that the national exchange rate was influenced by the rise in Treasuries and the uncertainties regarding the Copom’s decision on the cycle of Selic rate cuts. The chief economist at Nova Futura Investimentos, Nicola Borsoi, predicts a 0.25 percentage point reduction in the Selic rate, with the terminal rate at 10%. Analysts highlight that the real’s strength is closely linked to the difference between internal and external interest rates.

_{*With information from the CMA Agency}