The dollar’s rise is being pressured by the market’s disbelief about the effectiveness that the spending cut package would have on public accounts, making interventions in the exchange rate, carried out by the Central Bank (BC), ineffective according to economists consulted by the CNN.
Dollar this Tuesday (17) after inflation and an increase in economic activity contrary to the current contractionary monetary policy. But, even before the minutes of the last Central Bank meeting, market pessimism had already been manifesting itself in recent weeks and in .
The North American currency reached the R$6 mark on November 29th and renewed records in the following sessions.
Elson Gusmão, foreign exchange director at Ourominas, explains that the apparent market volatility is the result of a lack of confidence in the Federal Government’s measures to make a fiscal commitment.
“It’s a question of capital security. The market ends up not seeing the fiscal package presented by the government as feasible and a dynamic of increasing revenue without plans to reduce expenses. When you generate distrust, investors run to something safer, like the dollar and gold”, he says.
Currently, among the projects that must be analyzed by Congress this year are the Budget Guidelines Law (LDO), Annual Budget Law (LOA) and a package of measures that estimate savings of R$70 billion in two years.
“It is still unclear what will be done to put the accounts in order. The increase in interest rates does not help in this fiscal scenario, since public debt is linked to the Selic rate, making the situation unsustainable”, adds Gusmão.
The new Focus Bulletin released this Monday (16) brings the first projections for 2025 at the level of 14% per year in 2025, following the Copom’s decision to raise the Selic rate to 12.25% per year last week.
For Paulo Henrique Duarte, economist at Valor Investimentos, the executive’s decisions in conducting fiscal policies ended up “igniting” natural upward movements in the market.
“There is a lack of signaling from the executive and legislative branches of understanding on how to conduct this policy [fiscal]. In this scenario, the BC should be reactive and not assume the role of conductor”, he explains.
According to the economist, the scenario for the next two years should be a strong dollar, due to the election of Donald Trump as president of the United States.
“It would be a natural reaction anyway, other emerging countries have devalued against the American currency, but not at the level of the real”, he points out.
Year to date, the real has fallen 27.53% against the dollar. Other emerging currencies face similar falls, such as the Mexican peso with a 15.9% devaluation.
Gusmão highlights that in this context, the line auctions carried out by the BC do not help much to improve the exchange rate situation by introducing dollar liquidity to the market, already expected in this period.
This Tuesday, the BC held two new auctions to contain the currency’s rise, in one of which the value was US$2.015 billion. On Monday (16) a total of US$3 billion was auctioned with a buyback commitment by the BC.
“These auctions are already expected at the end of the year to meet the high demand expected for this end of the year for shipping abroad. In this sense, the liquidity of these auctions is quickly absorbed by the market and only affects the exchange rate in the very short term”, he explains.
