The Ibovespa, the main index of the Brazilian Stock Exchange, fell for the second consecutive session, with a decrease of 1.32%, to 96,990.72 points, the lowest level in almost three months, since July 3 (96,764.85 points). On Friday (18), the index closed with a devaluation of 1.81%, to 98,289.711 points.
The commercial dollar amended the second high, 0.43%, and closed the day quoted at R $ 5.40 on the sale, the highest value in three weeks, since August 31 (R $ 5.481). On Friday, the US currency had appreciated 2.77%, traded for R $ 5.377.
The dollar value released daily by the press, including the Twitter, refers to the commercial dollar. For those who are going to travel and need to buy currency at foreign exchange brokers, the value is much higher.
The market movement on Monday reflected fears about a possible resumption of strict measures of social distance in the main economies, as the cases of coronavirus have started to skyrocket in Europe. The UK is evaluating a second national lockdown, after new cases increase by at least 6,000 per day.
“We are seeing a significant deterioration in the health situation in Europe, in the countries that started to open the economy in April,” said Alejandro Ortiz, economist at Guide Investimentos. “Certainly this greater risk aversion raises the demand for security, and the main asset sought in times of caution is the dollar.”
With more investors buying the dollar, the currency tends to appreciate against the real.
Attention to government spending
But the rise in the dollar is not just a reflection of risk aversion abroad, Ortiz said.
In Brazil, the discomfort with the fiscal scene remains. There are growing doubts about the government’s ability to finance social assistance programs without breaking the spending ceiling.
Last week, a day after vetoing Renda Brasil, President Jair Bolsonaro authorized the Budget rapporteur, Senator Márcio Bittar (MDB-AC), to include in the 2021 budget proposal the creation of a social program with the same function program denied by the president.
“The economic team did not make it clear how the new program will be financed so that it fits under the spending ceiling, which is already at risk of not being fulfilled,” said Ortiz, also stressing that “political and fiscal risk go hand in hand. side “, since most of the noise in Brasília occurs in the middle of negotiations for reforms and ways of composing Brazilian public spending.
Last Wednesday, the Central Bank kept the basic interest rate at its historic low of 2% per year, after nine consecutive cuts. The BC will release the minutes of that meeting tomorrow, with more detailed information on its scenarios regarding the balance of risks for inflation.
* With Reuters