The dollar improved this Friday (29), the fourth consecutive session of rise in the local market and closed above R$ 6.00 for the first time in history.
In addition to the unrest over the government’s fiscal measures, which resulted in an increase in the risk premium, there was an impact of technical factors, such as the renewal of futures contracts and the dispute over the formation of the last tax rate of the month. .
The appreciation of the dollar began with the opening of the market, given the weakening of the US currency abroad. The currency surpassed the R$ 6.00 level in the first minutes of trading and, in just over an hour of trading, it surpassed the ceiling of R$ 6.10, registering a maximum of R$ 6.1155.
Control of public accounts
The buying fever subsided early in the afternoon with signals from Brasilia of commitment to the control of public accounts.
The president of the Chamber, Arthur Lira, stated that any cost reduction measure will depend on “all the effort, speed and good will of the Chamber,” but considered that government initiatives that represent a loss of income will only be evaluated in 2025. a reference to the proposed exemption from Income Tax for those who receive up to R$ 5,000 per month.
Then, it was the turn of the president of the Senate, Rodrigo Pacheco, to put the team on the field. In a note, Pacheco stated that the income tax exemption “is not on the agenda for now and can only occur if (and only if) we have the conditions for it.” If these conditions were not met, “it will not happen,” Pacheco warned.
“The market interpreted these messages as a movement towards fiscal responsibility, helping to alleviate the tension caused by yesterday’s announcements,” says B&T Câmbio’s head of foreign exchange, Diego Costa.
After Pacheco’s words, the royal team staged a recovery. The dollar changed sign and operated for a short period in negative territory, with a minimum of R$ 5.9579. The US currency later rose again and, although with much less momentum than that observed in the morning and in previous sessions, closed with a rise of 0.20%, trading at R$ 6.0012. The currency accumulated an appreciation of 3.21% in the week and 3.81% in November, after rising 6.31% in October.
“Market stress could be avoided”
The chief economist of Banco Master, Paulo Gala, affirms that the tension in the financial market in recent days, with the increase in future interest rates and the dollar, could have been avoided if the Government had not successively postponed the announcement of the package . which had initially been promised for just after the municipal elections.
“In addition to the package being more timid, the IR exemption was also announced, which probably won’t even happen. There is a whole discussion in Congress for 2025, it would eventually come into force in 2026, but I think it has no chance of being approved,” says Gala, in a comment. “But the fact is that it sent a signal to the market that the government is not that concerned about controlling spending.”
At a year-end lunch in Febraban, the Minister of Finance, Fernando Haddad, also tried to calm things down by stating that the IR project will only be voted on if it is neutral from a fiscal point of view and that the announced package is not “the best final” or “silver bullet”. Before the audience of bankers, the minister said that he can return to discuss the evolution of the Continuous Payment Benefit (BPC) and Social Security.
‘Disproportionate reaction’
For economist André Galhardo, a Remessa Online consultant, the market’s reaction to the spending package “was disproportionate.” He believes that volatility may decrease as the measures announced by the government are assimilated.
“At some point we must see an adjustment. The price should give way or at least become less volatile again. However, imagining a solid recovery of the Brazilian currency in the coming months is a challenge,” says Galhardo, recalling that there are external factors, such as the return of Donald Trump to the White House, that should limit the real’s momentum.
When evaluating the possibility of the Central Bank intervening in the exchange market, the chief economist of Banco Pine, Cristiano Oliveira, affirms that the return of the dollar exchange rate to “desired” levels between R$ 5.70 and R$ 5 .80, which prevailed before the The novel announcement of the spending cut package will only come with the adoption of broader measures.
“Exchange rate intervention alone would not have the desired impact. A combo would have more effect, with the sale of dollars, a significant increase in the Selic rate and a complement to the fiscal adjustment with more robust measures,” says Oliveira.
