Dollar Hits R$4.22 Then Closes at All-time High

RIO DE JANEIRO, BRAZIL – The dollar’s rise in trading against the Real over the past few weeks prompted the US currency to record its highest price in history on Monday, November 25th.

The dollar rose 0.53 percent to reach a level of R$4.22 for sales, its highest value since the beginning of the Real Plan. The previous record was reached a week ago at R$4.21.

The bad news in the Brazilian scenario offset optimism abroad with trade negotiations between China and the United States, and the dollar’s spike did not subside.

The greatest villain of the day was the announcement of a deficit of US$7.9 billion in current transactions in October, which led the balance of the past 12 months to reach the negative mark of three percent of Gross Domestic Product (GDP).

The market’s gloom led the dollar to R$4.2178 in the day’s high.

The figure was worse than expected in a Reuters survey with analysts, with a shortfall of US$5.475 billion. In the month, direct investments in the country (IDP) totaled US$6.8 billion, also below the analysts’ projection of US$7.5 billion. As a result, concerns about the prospects for the inflow of resources into the country are renewed.

“The optimistic news about trade should have generated a downward drift for the dollar in Brazil, but this data on the current account falling below expectations emerged,” explained Alvaro Bandeira, chief economist of the digital bank Modalmais.

The Real had the second-worst performance against the dollar out of 33 currencies in this session, but some of the Real’s rivals were also losing ground, such as the Turkish lira, South African rand and Mexican peso.

Source: Veja