The dollar fell for the third consecutive session against the real on Thursday, extending a sequence of declines that brought it to its lowest closing level in ten months on the eve, as investors reacted to new inflation data from the United and took advantage of a more optimistic home environment decline.
At 10:00 (Brasilia time), the spot dollar was down 0.26%, to 4.9281 reais on sale.
On B3, the dollar futures contract for the first month was up 0.13% to 4.9400 reais.
The dollar fell 0.74% this morning to 4.9043 reais, the lowest intraday level since the first half of June last year.
Data showed a decline in US producer prices in March, reinforcing a scenario of cooling inflation, which could lead the Federal Reserve to be less aggressive than feared in the conduct of monetary policy.
A day earlier, another report had shown that consumer prices in the US cooled more than expected last month.
“The Fed will probably[raise rates]by 25% (percentage point in May) and the market is hopeful that it can eventually cut rates” in 2023, Hideaki Iha, a currency trader at Fair Corretora, told Reuters.
The prospect of a lower terminal interest rate in the US favors the real, making the currency attractive to foreign investors adopting “carry” strategies. These consist of taking out a loan in a country with low rates and investing that money in a more profitable market, so as to profit from the difference in borrowing costs.
The Selic rate is currently at 13.75% a year, a high level that has been touted for months as a boost for the local currency.
“With US CPI out of the way, weakening US economic data is once again the main market theme. We remain bullish…on high carry stocks in emerging currency markets,” Citi said in a report.
But in addition to the “carry” appeal, the real was also boosted by a strong influx of trade flows into Brazil, Fair’s Iha said, citing optimism about yields for commodities such as soybeans.
Even the absence of very negative news in the domestic political and fiscal sphere has opened up spaces for the dollar to fall, added the trader, while stating that there are limits to how much the dollar can fall in the short term, after the sharp movement of the last two trading sessions.
On the eve, the US spot currency fell by 1.34%, to 4.9408 reais, the lowest quotation since June 9, 2022, when it closed at 4.9166. In the cumulative of the last trading sessions, the currency returned almost 2.5%.
According to Iha, the market “has calmed down” and is now in a “positive waiting period” pending the government’s new fiscal framework being sent to Congress and monitoring possible changes to the proposal as it is being drafted.
Source: Terra
Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
