U.S. Dollar and Stock Market Close 2018 with Appreciation in Brazil

By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – After a year of political and economic uncertainties in Brazil, the stock market and the dollar closed 2018 with appreciation. The U.S. dollar closed 2018 at R$3.876/US$1, with an accumulated increase of 16.9 percent while the São Paulo stock exchange’s Bovespa Index closed the last trading day of the year at 87,887 points, a 15 percent increase.

During the first half of the year, the US currency dollar remained relatively stable in Brazil. But as trade tensions increased between the United States and China, the U.S. currency appreciated around the world in mid-May, including in Brazil.

The appreciation intensified during the national truck drivers’ strike in May, which led to strong volatility in the financial market.

On September 13th, the US dollar closed at R$4.196/US$1, the highest rate since the beginning of the Real Plan. After the election results, with the victory of Jair Bolsonaro, the currency decreased to as low as R$3.70/US$1, only to rise again in the November and December, because of turmoil in the U.S. market.

To halt the surge of the US dollar, the Central Bank (BC) auctioned since the end of November US$12.25 billion of Brazil’s international reserves. The BC’s actions seemed to have helped ease the pressure over the Brazilian real with the dollar closing the last week of the year with decline by 0.53 percent in relation to the Brazilian real.