Brazil: Dollar advanced against the real after Lula da Silva’s victory in presidential elections

Today, October 31, the dollar is trading higher against the real. Investors evaluate the result of the runoff presidential elections, which brought the victory of candidate Luiz Inácio Lula da Silva (Workers’ Party – PT, left).

The doubts about the fiscal policy adopted and the names that will compose his economic team generate fears among the agents.

At the same time, the exchange market is also pressured by the dispute of the end-of-month Ptax, which takes place today, in addition to the mixed climate in the foreign environment.

Shortly before 10:20 AM, the commercial dollar advanced 0.17% to R$5.3095 after peaking at R$ 5.4095.

In a tight race, the PT candidate Luiz Inácio Lula da Silva won his third election for the presidency of the Republic, with 50.9% of the valid votes, against 49.1% for the re-election candidate and current president of the Republic, Jair Bolsonaro (Liberal Party – PL, right).

It was the first time a president failed to win re-election in Brazil.

“The market’s first reaction seems to be defensive about da Silva’s election,” evaluates the director of FB Capital, Fernando Bergallo, who ponders that, however, the continuity or direction of the movement will be impacted by the indication that Bolsonaro will accept the result of the vote and Lula da Silva’s nomination of names from his economic team.

“There is a fear about the economy’s future in the country. So, obviously, the first reaction would be negative when facing a change of government, and any change of direction generates uncertainty in the market.

“In this uncertainty, the process of liquidating the positions is the first thing to do,” evaluates the founding partner of Fatorial Investimentos, Jansen Costa.

With this, at the opening, the dollar rose 2% against the real, but the movement cooled down partially in the following minutes.

“The initial reaction was exacerbated. Amid an environment that favors volatility, with the formation of the Ptax and mixed foreign exchange,” comments Bergallo from FB Capital.

The Ptax is the exchange rate used as a reference for settling derivatives contracts.

“We are in the ‘day after’ an intense and polarized electoral process, and I believe that, from now on, the market should react punctually to each piece of information that is released here,” comments Bergallo.

Meanwhile, abroad, the market is preparing for the meeting of the Federal Reserve (Fed, the central bank of the United States), which takes a new decision on monetary policy on Wednesday, November 2.

The DXY index, which measures the dollar’s strength against a basket of six major currencies, was up 0.56% at 111.37 points.

With information from Valor Econômico