By Jay Forte, Contributing Reporter
RIO DE JANEIRO, BRAZIL – The U.S. dollar opened this morning (Wednesday, July 4th) with a slight increase of 0.17 percent, selling at R$3.9019/US$1, among the strongest exchanges to the Brazilian real since March 2016, when it reached R$4.09/US$1.
On June 7th, the foreign exchange rate hit a 26-month low at R$3.9684/US$1, retreating only after the Central Bank announced the negotiation of more than US$6.8 billion of foreign exchange swap contracts (future sale of the American currency).
Trading is expected to be slow today because of the holiday in the United States, which celebrates their Independence Day. The Central Bank has not signaled any extraordinary auction of foreign exchange swap as investors’ attention is focused on Friday (July 6th), when the U.S. government promised to start taxing China’s products.
Last month the U.S. dollar closed the first half of the year accumulating a valuation of 16.98 percent. The U.S. currency began the first three months of the year recording a fall of 0.43 percent, to then accumulated to 17.49 percent between April and June.
In the last trading session of June, the dollar closed up 0.56 percent, quoted for sale at R$3.77773/US$1. Brazilian investors remained concerned about a U.S.-China trade war on the foreign markets and Brazil’s presidential elections in October.
Since May 14th, the Central Bank has been operating in the market by performing foreign exchange swaps (future sale of U.S. currency) and line auctions (sale with repurchase agreements). The BC had already injected R$43 billion with these operations since May.
The exchange rate has affected Brazil’s international travel spending balance, calculated by the expenses of Brazilians and the revenues of foreigners, which was at a negative US$1.187 billion and fell to US$5.224 billion deficit in the first five months of the year.