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By Luana Maria Benedito
SAO PAULO (Reuters) – The dollar showed volatility on Tuesday, reflecting caution from international investors ahead of the first US presidential debate, while fiscal fears continued to dominate the domestic scene.
At 10:57, the dollar advanced 0.26%, to 5.6,500 reais in the sale.
After opening with an increase of about 0.4%, in just half an hour of trading the US currency dropped to 5.6064 reais, a loss of 0.51%, touching the low of the day before recovering and hitting 5, 6720 reais at the maximum.
The move reflected the uncertainties surrounding the US election on a day of debate between the current president, Donald Trump, and his Democratic opponent, Joe Biden, as investors continued to keep an eye on the United States House for signs of progress in the United States. negotiations for an economic aid package.
“There is a little bit of caution in the market in general, and the investor keeps an eye out to see if there will be a fiscal stimulus package out there,” explained Victor Beyruti, economist at Guide Investimentos.
Abroad, assets considered risky, such as emerging currency pairs of the real, presented mixed performance, with market agents operating in standby mode.
Meanwhile, in Brazil, doubts about the health of public accounts remained in the spotlight after the government decided that the Citizen Income aid project will be funded by resources that will not come from spending cuts, raising suspicions about a “trick to hide escape” from the ceiling “, as the Minister of the Federal Court of Accounts (TCU), Bruno Dantas, said on Twitter.
The news had already shaken the domestic sentiment on Monday, when the spot dollar closed up 1.46%, at 5.6351 reais on the sale, the highest level since May 20.
“The market is still digesting the news of the Citizen Income financing, and will be waiting for some explanation from the government” on how to reconcile this spending with an already tight budget, said Victor Beyruti, stressing that the investor “may be arriving at the lowest level of confidence that he already had in this government; we continue with a strong concern in the fiscal. “
Sidnei Moura Nehme, economist and executive director of NGO Corretora, said in a note that, given the fiscal scenario, “the time may come ‘to throw in the towel’ and assume a broadly defensive stance, since the imbalances may affect the whole dynamic of the country, already widely limping in the coexistence with the coronavirus pandemic (…), and without consistent ‘exit doors’ guidelines of this troubled scenario that involves the government’s monetary, fiscal and foreign exchange policy. “
In 2020, the dollar has already accumulated a gain of more than 40% against the Brazilian currency, driven by a scenario of low interest rates, fiscal uncertainties and political tensions in Brasília, leaving the real in the worst-performing position among a basket of more than 30 currencies in the year.