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Critical statements by the mayor, Rodrigo Maia, to the government base in Congress helped the trade dollar return to its highest level since May on Tuesday. In an already difficult day for the Brazilian currency, which contradicted the majority of its peers and devalued against the dollar, the speech of the parliamentarian, for whom it is the base of government that obstructs the voting agenda in the Chamber and demanded a greater effort of the Executive. In voting on the reforms, it helped cement a greater search for protection by investors.
At the end of the day, the US currency was trading at R $ 5.6857, an increase of 1.26%. This is the highest level since the close on May 20, when the dollar was at 5.6875.
Upon his arrival in the Chamber, Maia said that the government base obstructs the votes due to the impasse in the formation of the Mixed Budget Commission (OCM) and said that he hopes that the votes on economic reforms will have “more interest” on the part of the Executive. The parliamentarian also said that it only makes sense to vote on the Budget after the PEC Emergency, with rules to cut expenses and that, for that, it is necessary to cancel the January recess. “Otherwise, the Emergency PEC will only vote in February and the Budget in March,” he said.
“I hope that when the reforms arrive, we will have a majority in the Chamber so that the dollar does not reach R $ 7,” he added.
The mayor’s statements return the fiscal issue and the short voting schedule to the focus of the markets, issues that were left in the background by the decision of President Jair Bolsonaro until the end of the elections. The matter also returns on the eve of Copom’s interest decision. Although there is consensus to maintain interest rates, there is the expectation that the statement will bring some message about the fiscal uncertainties that insist on remaining on the horizon, as well as the surprises with inflation in recent weeks.
For TD Securities, Copom’s decision tomorrow should be neutral for the national exchange rate. “The real risk for the real is a negative spiral of fiscal risk that, in the latter case, would force the Central Bank to act on the short part of interest rates to stabilize the currency. Although we believe that the foreign exchange market trades such an event, the interest market seems to do so to some extent, ”says the Canadian bank in a report.
For Société Générale, the combination of long negative real interest rates, the lack of momentum for reforms and the risk that the fiscal and debt trajectories will remain negative should keep the real under pressure in the coming quarters.
“On the external front, a second wave of covid-19 could undermine the global recovery and jeopardize the recovery in commodity prices, while a contested election in the United States could increase global risk aversion. Finally, Any further deterioration in US-China relations would negatively affect the appetite for Brazilian assets, ”says SocGen.
The French bank works with a projection in dollars of R $ 5.80 at the end of 2020 and of R $ 6.00 in the third quarter of 2021. The main factor of the recent dynamics, say the bank’s analysts, was the deterioration . from a tax perspective.
“Although global conditions remain favorable, the real has faced a strong challenge due to the worsening fiscal balance, public debt and falling interest rates. The real has devalued 29% this year and is still under pressure even before a significant correction. current transactions “, they point out.
– Photo: Pixabay
