Dollar experiences volatility; ends the week with a 1.3% increase against Brazil’s real
The US dollar faced a volatile session on Friday. In the morning, it surpassed the R$5.00 mark, a level not seen since June 2.
However, as the day progressed, the dollar weakened globally. Despite its early challenges, the Brazilian real ended as one of the session’s top performers among emerging market currencies.
By the close, the commercial dollar had fallen 0.29% to R$4.9670. Still, over the week, it had risen by 1.29%.
By 5:45 pm, the future contract for September was down 0.15% to R$4.9825.
The global scenario significantly influenced the dollar’s strength this week, with the rising yields of US Treasuries playing a part.
The real’s vulnerability increased due to uncertainties in China and challenging situations in Argentina.
The R$ 5.00 mark appeared to be a consistent barrier, noted Italo Abucater, a currency manager at Tullett Prebon.
Tensions were heightened when Evergrande, a Chinese real estate developer, sought bankruptcy protection in the US, indicating issues in China’s real estate sector, a primary economic driver.
In addition, China’s central bank (PBoC) intervened in its currency market to reduce yuan volatility.
Commodity-linked currencies were initially under pressure due to concerns about Asia’s leading economy.
However, as the day continued, both the Brazilian real and South African rand improved their standing.
For the month, the dollar has risen over 5%.
Notably, there’s been a steady inflow of US dollars into Brazil, with the currency flow showing a net entry of US$5.74 billion until August 11.
Some financial agents believe the real’s significant depreciation in August is short-lived.
As Latin American central banks adjust rates, currency strength, largely driven by interest rate differentials, might evolve differently across countries.
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