RIO DE JANEIRO, BRAZIL – The dollar has shot up by 2,8 percent and closed sold at R$5,3787 on Friday, September 18th. Although the US currency had also appreciated against other emerging currencies, the real had the world’s worst performance in recent months.
According to Jefferson Ruik, Correparti’s currency exchange director, the move is justified by low liquidity, which increases currency fluctuations, and by the recomposition of a long position in dollars by large banks. “Any larger operation increases the dollar’s appreciation. As there were some major recomposition operations it eventually weighed in.”
Felipe Pellegrini, head of the Travelex Bank’s exchange table, comments that the market’s low liquidity was one of the main reasons for the sharp movement that occurred throughout the day. “Large operations ultimately triggered stop orders and there was a herd effect, a rush for the dollar,” he says. Although the bullish US currency was more significantly concentrated in the local scenario, the negative international market had a downward influence.
Abroad, the day was negative, with investors considering the increase in the number of coronavirus cases in Europe and the return of harsher isolation measures in the Spanish capital, Madrid. In the United States, investors continued to reflect the lack of fiscal and monetary stimulus.
President Donald Trump’s statement about the US ban on downloads of the Chinese App Tik Tok as of Sunday also did not help matters. The announcement occurs during the election campaign and after ByteDance signed a partnership for Oracle to manage Tik Tok’s operations in the USA. Although it helps raise commercial tension between the two powers, the news had a limited impact on the markets in the morning.
Vanei Nagem, exchange analyst at Terra Investments, emphasizes caution over the weekend. “After a troubled week with interest rate decisions in Brazil and the United States, investors feel more comfortable in spending the weekend bought in dollars. Also not to despair if the news is very bad on Saturday or Sunday,” he says.
Source: Exame