RIO DE JANEIRO, BRAZIL – In the last trading session of the week, two forces balanced each other in the foreign exchange market, causing the dollar to hover near stability in the last stretch of Friday.
On the one hand, the greater appetite for emerging currencies abroad after the labor market data in the US caused the US currency to trade at R$4.9881 at the beginning of the trading session.
On the other hand, the news that the Prosecutor General (PGR) requested the opening of an investigation against President Jair Bolsonaro to investigate alleged misconduct in the case of the purchase of the Covaxin vaccine, changed the momentum.
Thus, the dollar ended the day with a gain of 0.18%, trading at R$5.0537. With yesterday’s performance, it has accumulated a high of 2.35% for the week. This is the first weekly high for the dollar since the second week of June, when it began to fall.
Under pressure from the Supreme Court, the PGR has requested the opening of an investigation into whether Bolsonaro committed misconduct in connection with allegations of irregularities in the purchase of an Indian vaccine, one of the most important developments to date in the Covid CPI congressional investigation.
Although the prevailing reading, in Brasilia and among financial market participants, is that an indictment is somewhat distant at the moment, the PGR’s decision brings the scandal closer to the seat of government, the Planalto Palace.
“Since we are in the antechamber of the election, these low dollar windows can be opportunities for players to build defensive positions,” says Flavio de Oliveira, founder and head of the equity desk at Zahl Investimentos. “But if you look at the movement of the stock market, which is still near 127,000 points, it seems to me that the theme now is more noise,” he adds.
“Despite the myriad ups and downs of Bolsonaro’s government, the last ten days are certainly the nadir of his administration. Since late June, he has been at the center of two corruption scandals involving the purchase of vaccines,” TS Lombard writes in a report Friday. The consulting firm believes that although the election is still far away and much will happen, his re-election project is “increasingly threatened”.