Brazil: US Dollar rises 4% and closes at R$4.80 on a day of external and internal tension

RIO DE JANEIRO, BRAZIL – The financial market had a day of panic after the return from holiday. The dollar rose 4% and had the highest rise for a single day since the covid-19 pandemic in March 2020. Since November, the stock market had the biggest daily drop and recorded its worst week in six months.

The commercial dollar closed this Friday (April 22) and sold at R$4.805, up R$0.185 (+4%). The rise was not greater because the Brazilian Central Bank (BC) intervened in the exchange rate, selling US$571 million from international reserves in the late afternoon. At the day’s maximum, around 04:00 PM, the exchange rate reached R$4.83. It was the highest daily rise since March 16, 2020.

The Brazilian real led the devaluation among major global currencies on Friday. The currency, which had been falling in April, started to register a 0.92% increase in the month. In 2022, the North American currency accumulates a retreat of 13.82%.

The stock market had a losing day. The Ibovespa index of the B3 closed at 111,078 points, with a fall of 2.86%. The indicator is at its lowest level since March 15, falling for five straight sessions. The Brazilian stock market fell 4.67% in the week and had the most significant weekly loss since the third week of October.

Tensions marked the day both in the external and internal scenario. In the international market, indications that the Federal Reserve (Fed) will be more aggressive in raising interest rates in the United States increased the demand for dollars around the globe.

On April 22, the Fed’s president, Jerome Powell, confirmed that the organ would raise the basic interest rates in the planet’s biggest economy by 0.5 points in the next meeting at the beginning of May.

Higher interest rates in advanced economies stimulate capital flight from emerging countries like Brazil. During the week, one of the Fed’s regional leaders said he supported a 0.75 point increase in the next meeting of the organ.

In the domestic market, the political uncertainties after the pardon granted to federal congressman Daniel Silveira and the request for a collective examination by the Federal Audit Court (TCU) regarding the privatization of Eletrobras impacted trading. The electricity company’s shares fell more than 4% on Friday.

With information from Reuters