Ibovespa falls and dollar rises amid Lula’s attacks on the Central Bank

Amidst another day of attacks by President Luiz Inácio Lula da Silva on the Central Bank, the Ibovespa closed with a drop, and the dollar rose on Tuesday, Feb. 7.

The indicator fell almost 1%, and the US currency appreciated 0.5%.

In the Brazilian Stock Exchange (B3) trading session on Tuesday, Feb. 7, the Ibovespa ended quoted at just under 107 thousand points, and the dollar ended up worth R$5.20.

Lula has criticized the Central Bank for the current basic interest rate of the Brazilian economy – the Selic.

In its last meeting, the Central Bank’s Monetary Policy Committee (Copom) decided to maintain the Selic at 13.75%.

Among the justifications for the measure, the monetary authority alleged the external pressure on inflation and the fiscal risk in Brazil.

One of the fears is the possibility that the government will increase spending uncontrolled, causing an explosion in public debt.

Thus, one of Brazil’s economic pillars would be threatened.

During Aloizio Mercadante’s inauguration as president of the BNDES, the Brazilian presidential candidate even said that the justifications given by Copom for the current level of the Selic rate were a disgrace.

However, the politician has already made it clear that financial commitment is not one of the priorities of his current government.

Roberto Campos Neto, president of the Central Bank, rebutted Lula’s attacks.

“The more independent you are, the more effective you are, and the less the country will pay in terms of the cost-benefit of monetary policy,” he said on Tuesday.

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