Brazil: US dollar drops to R$5.34 with relief in the foreign market

RIO DE JANEIRO, BRAZIL – After several days of international turbulence, the financial market gave a truce on Thursday, July 7. After five straight highs, the dollar fell for the first time and closed below R$5.40. The stock market rose more than 2% and recovered to the level of 100,000 points.

The commercial dollar closed the day at R$5.345, down R$0.07 (-1.42%). The quotation operated low during the whole day but started to fall even more after the opening of the North American market.

At the minimum of the day, around noon, it was sold at R$5.33. With yesterday’s performance, the dollar accumulated a high of 2.01% in July. In 2022, the currency drops 4.14%.

In the stock market, the day was also marked by relief. The Ibovespa index, from B3, closed at 100,730 points, up 2.04%. The indicator was driven by commodities (primary goods with an international quotation), whose prices recovered on Thursday with the cooling of the external market.

The disclosure that applications for unemployment insurance rose in the United States last week in June helped to reduce tensions. The data indicate that the interest rate hikes by the Federal Reserve (Fed) are having an effect and opened the possibility that the monetary authority will not raise interest rates in the world’s largest economy more than expected.

In the minutes of the last meeting, held at the end of June, the Fed indicated that it might raise interest rates by 0.5 or 0.75 percentage points in the next meeting.

On July 6, the document’s release created turbulence in the financial market, but labor market data indicated that the Fed might raise the rate by 0.5 percentage points at the next meeting.

Higher interest rates in advanced economies stimulate capital flight from emerging countries like Brazil.

With information from Reuters