RIO DE JANEIRO, BRAZIL – On a tense day in Brazil and abroad, the dollar bounced back to R$5.45 and closed at its highest since the end of April. The stock market tumbled and the Ibovespa index returned to 110,000 points.
The commercial dollar closed Monday, October 4, selling at R$5.447, up R$0.077 (1.44%). The price came close to stability in the first trading hour, but began to rise after the U.S. market opened.
The U.S. currency is at its highest value since April 27, when it closed at R$5.461. The currency has appreciated 4.97% throughout 2021.
The stock market also had a difficult day. The Ibovespa index, of B3, closed the day at 110.393 points, with a sharp 2.22% drop. The indicator traded down all day and is at its lowest level since September 20, when it closed at 108,000 points.
Three main factors heightened the tension in the international market. One of the Federal Reserve’s regional presidents said yesterday that inflation in the United States may remain high longer than expected. The statement adds to expectations that the Fed will raise interest rates sooner than expected.
In China, real estate developer Evergrande had its shares suspended on the Hong Kong stock exchange. The company intends to sell a subsidiary valued at US$5 billion to settle debts and avert new defaults. Turbulence in the global market worsened during the afternoon, when Facebook, Instagram, and WhatsApp’s systems crash impacted technology companies’ shares.
In Brazil, expectations regarding a potential emergency aid extension pressured trading. Investors fear the impact of the measure on public accounts. In parallel, the market is analyzing the repercussions of the disclosure that Economy Minister Paulo Guedes and Central Bank President Roberto Campos Neto had companies in tax havens after taking public office.
On Sunday, October 3, the two said that the offshore companies had been declared to the Brazilian Treasury, the Central Bank, the Public Ethics Committee, and other relevant authorities. The existence of these companies was disclosed by the Pandora Papers, an investigation by an international journalists consortium based on documents leaked from 14 law firms abroad.