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Today was a positive day for the market Brazilian that is still adapting to the new government and the changes related to the command of the economy. Thanks to news related to both American and Brazilian interest issues, the dollar was quoted at R$ 4,94. The coin has not been below R$5 since June 2022. 5g671x
Dollar and the Brazilian market 303z5d
It is always a moment of economic instability when there is a change of government, as happened recently in Brazil. Investors from both market internal as external are attentive to the announced names and their main speeches in order to be able to have better expectations about how the economic policy will be and thus determine whether they will have good or bad confidence in the government who assumes.
In the case of Brazil, this event was even stronger because the government had a very radical change not only in the economic ideal, but also in the political one.
Recently, some speeches by the then President Lula were not resonating well in the market, and concern with issues related to spending ceilings and inflation inside the government were troubling investors.
In spite of that, the dollar has now completed its 4th week operating in decline, and that's not all we have to celebrate. Today, for the first time since June 2022, the currency was quoted below BRL 5, trading at BRL 4,9417
With this series of falls, the agency's specialists Reuters they are confident that the dollar will finally and more safely break with the fives, and return to being quoted at around R$4 on a continuous basis.
Interest in the United States 635ny
This time the drop was mainly driven by the announcement by the Federal Open Market Committee (fomc, in the acronym in English) of the Federal Reserve (Fed) to announce an increase in the interest rate by 0,25%. Although the increase in itself is not good for Brazil, the drop in the dollar happens because following the last increases, the rate was expected to rise from 0,50 to even 0,75 points.
It is worth ing that at this moment American interest rates are quite high and this happens because the USA is dealing with a problem that is not very common for them: the inflation.
One of the ways to contain inflation – this being the main goal of the Fed – is to increase interest rates, with that the money becomes more expensive and circulates less. This measure is usually offset by a decrease in economic growth, after all, with higher interest rates, fewer companies and people decide to take out loans and, consequently, investing is no longer a good option because the risk is higher.
Interest in Brazil 1m1y1v
When we talk about inflation and interest, we are talking about common problems for Brazil.
Brazil currently has the largest Interest in the world exactly to combat inflation. The Central Bank of Brazil decided to keep the selic rate at 13,75%, and although the number is quite high, the expectation was that it would be increased.
Thus, the announcements of both Banks generated a positive tide to the market which, sincerely, we hope and hope will last for a long time.
The importance of a low dollar 3mr5v
The dollar is not only the strongest currency in the world, it is also the most important currency in the world.
many people think “ah, but I use the real, why would I care about the dollar?”, except that this currency, in addition to being the official currency of the world's largest economy - the United States of America - is also the currency chosen by the global market to do business.
This has been happening since 1944, at the Bretton Woods Conference, where the world's largest economies replaced gold in international trade with the dollar. This happened because at that time the US economy was already extremely powerful, and from then on its world hegemony only increased.
After this decision, countries began to make reserves in dollars, as the currency was necessary for world trade. Since then, the dollar has served as a basis for speculation across the world stage.
An example of the importance of the dollar for us is that Brazil is not self-sufficient in wheat production, and we need to buy wheat from the Americans. The higher the dollar, the higher we will pay in wheat. The more we pay in wheat, the more expensive the bread that every Brazilian puts on the table every day is.
The dollar is an extremely safe currency in the market by your weight. That is why, in times of crisis, as happened with the COVID-19 stoppages, all investors and people with reserves buy the dollar, so as not to risk losing their money, and, as a consequence, in those moments the dollar skyrockets, affecting everyone's economy. countries – mainly those in development like Brazil.
The drop in the dollar is always understood as a sign of improvement in the domestic economy and also more confidence on the part of investors and shareholders of the market.
SOURCES: Investing.com, Reuters
Text proofread by: Pedro Bomfim
