U.S. Dollar Closes at Lowest Value in 19 Months in Brazil

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – On a seemingly calm day in the financial market, the U.S. dollar depreciated against the Brazilian real to its lowest value in more than nineteen months falling below R$3.10/US$1. The depreciation was influenced by both foreign and domestic news.

The U.S. dollar closed Tuesday, February 14th at R$3.096/US$1, down by 0.45 percent, its lowest value since July of 2015.

On the domestic front Brazil’s Central Bank (BC) decision to sell US$300 million in traditional currency swap contracts is seen as one of the factors that helped devalue the US currency.

It was the first time in two weeks that the Brazilian monetary authority conducted this type of transaction and analysts expect the CB to maintain this rhythm of swap sales until the end of the month.

On the international front, not even the possible decision by U.S. Fed, to raise U.S. interest rates, helped the North American currency in Brazil. Wednesday, U.S. Federal Reserve Chairman Janet Yellen said during a Senate hearing that the United States would be able to raise the economy’s basic interest rates in upcoming meetings.

Higher interest rates in the largest economy on the planet attract capital of investors who withdrawal of resources from emerging countries, such as Brazil.

As the U.S. dollar hit its lowest rate against the Brazilian real, the country’s main stock market, Bovespa, took the day to adjust recent gains.

After reaching the highest level in almost five years on Monday, the Bovespa index at the São Paulo Stock Exchange ended the day down by 0.38 percent at 66,713 points.