RIO DE JANEIRO, BRAZIL – The U.S. Central Bank’s toughening of the U.S. interest rate hike caused turbulence in the global financial market. The dollar surpassed the R$5.70 threshold, on the third consecutive day of highs.
The commercial dollar closed Wednesday, January 5, at R$5.712, up R$0.022 (+0.39%). The quotation followed the pattern of recent days, dropping in the early afternoon, but gaining momentum towards the end of trading.
At its lowest of the day, the North American currency reached R$5.64. Once again, the Central Bank made no intervention in the market. It only auctioned roll-over contracts (renewal) of currency swaps, which work like selling dollars in the futures market, without placing new contracts.
In the stock market, the day was also marked by instability. The B3 Ibovespa index closed the day at 101,006 points, down 2.42%. This was the largest daily decline since November 26. The indicator is at its lowest level since December 1, when it stood at 100,900 points.
Investors reacted to the release of the most recent Federal Reserve (Fed) meeting minutes. In the meeting, which took place on December 14 and 15, the directors said that the North American labor market is under pressure, indicating that the agency may anticipate the increase in interest rates, initially scheduled for March.
Higher rates in advanced economies encourage the flight of resources from emerging countries, such as Brazil, with investors buying U.S. Treasury bonds, considered the safest investment on the planet.
The tone of the Fed’s minutes also influenced North American stock markets. The Dow Jones index (industrial companies) fell 1.07%. The S&P 500 (the 500 largest companies) fell 1.94%, but the largest shock occurred in the Nasdaq (technology companies), which closed down 3.34%.