The dollar surpassed the mark of 5.62 reais this Thursday morning in the wave of caution registered in the last trading session, with global fears about a jump in Covid-19 cases and local fiscal risks leading investors to seek refuge in the currency North-American.
At 10:50, the dollar advanced 0.36%, to 5.6076 reais on sale, after having touched the level of 5.6250 reais.
The most liquid dollar futures contract rose 0.46%, to 5.617 reais.
In the last session, the dollar in cash had increased by 2.18%, to 5.5876 reais on sale. The movement was a reflection of widespread risk aversion in international markets after an acceleration in the spread of the coronavirus led to the adoption of new restriction measures in the United Kingdom, generating fears that more important economies will once again limit their activity as the pandemic advances.
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Flávio Serrano, chief economist at the Haitong bank, cited a slowdown in the dollar purchasing movement this morning after the spike recorded the day before, but highlighted that “there is still a feeling of caution both domestically and internationally, amid the risk of a second wave of Covid”.
This Thursday, the index that tracks the US currency against six pairs of rich countries was nearing two-month highs, reflecting the search for protection in safe assets. Risky currencies whose movements the real tends to follow, such as the Mexican peso, South African rand and Australian dollar, were falling.
In Brazil, analysts continued to cite fiscal risks and political and economic uncertainties as factors putting pressure on the real, which continues to be the worst-performing currency of the year among a basket of more than 30 US currency pairs.
In just the last five trading sessions, counting this one, the dollar has accumulated a jump of around 7.4% against the Brazilian currency, appreciating by around 40 cents since closing at 5.23 reais last Thursday.
“The speed of appreciation reflects the external risk, and with the local fiscal risk everything is exacerbated”, said Flávio Serrano. “The key point is that there is a lot of volatility derived from a high level of uncertainty.”
The main fear of domestic investors revolves around the spending cap, as there are doubts about how Jair Bolsonaro's government would finance a social assistance program without putting stress on public accounts.
The government leader in the Chamber of Deputies, Ricardo Barros (PP-PR), stated on Wednesday that the administration will maintain the spending ceiling and fiscal rigor and that there will be no proposals to increase the tax burden.
This Thursday, the Central Bank of Brazil made reference to the spending cap rule in its Quarterly Inflation Report, saying that there is little or no room to cut the Selic rate ahead, with the rise in basic interest rates being ruled out as long as it is maintained the framework for inflation and the discipline of public accounts.
Source: agrolink
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