The dollar rises 2.5% in September and the real is consolidated as the worst currency in the world in 2020; see ranking

SÃO PAULO – With the tax issue increasing the tension among investors here in Brazil, the commercial dollar closed September with an increase of 2.46% against the real, quoted at R $ 5.6150 in the purchase and R $ 5.6160 in the sale.

In addition to the coronavirus crisis, which affects most emerging currencies, the real has other factors that are weighing on its performance. And one of the main ones is the fiscal risk, which is even greater this week with the disappointment of the market with the Citizen Income program.

In the last week, analysts had already indicated this concern given the difficulties that the government was already facing in making the necessary adjustments in the economy. Bank of America even said it was more cautious on the real and warned of short-term volatility.

In an interview with Bloomberg, Sergio Zanini, managing partner of Galapagos Capital, highlighted that the market is “rooted in what was announced on Monday. [o Renda Cidadã] be invested at some point ”.

“The market no longer buy this speech from the Executive, in which on the one hand it always defends the spending ceiling and fiscal responsibility, but on the other hand it always announces plans that go against the current,” said Breno Martins, fixed income operator of MAG Investimentos. , also for Bloomberg.

In the second, the government presented the new social program and has in its proposal the idea of ​​using Fundeb and precautions as a form of financing, a decision that was seen by many experts as a “fiscal walk”. This generated much criticism of the proposal and now the market is looking to see what the government will do about it.

On Wednesday, the Minister of Economy, Paulo Guedes, affirmed that it was never proposed by the economic team to break the ceiling or finance programs in the wrong way, referring to directing resources to the Citizen Income with the limitation to the payment of precautionary payments.

At a press conference, Guedes said that his team is studying how to merge 27 existing programs as a way to consolidate a more robust cash transfer program, which represents a landing after the end of emergency aid this year. He stressed that, being a permanent expense, it must be covered with a permanent income.

With this growing concern in recent weeks, the real has established itself as the worst performing currency in the world in 2020 to date, with the dollar rising 39.60% against the Brazilian currency, according to Refinitiv data.

The performance is by far the worst, as against the second worst currency, the Turkish lira, the dollar rose 29.69%. As a result, the real also appears far behind the currencies of countries with major crises, such as Argentina, where the dollar appreciated 27.25% against the peso.

Other currencies that see the dollar appreciate strongly in the year are the Russian ruble (25.17%), the South African rand (19.59%) and the Mexican peso (16.77%) and Colombian (16.44%). %).

The coronavirus crisis has weighed heavily on the performance of emerging currencies, as global investors tend to seek safer assets, including the US dollar, in times of heightened stress.

So much so that against some currencies considered stronger, the US currency has declined this year. This is the case of the euro, with a fall of 4.33% for the dollar, the Japanese yen (-3.10%) and the Swiss franc (-4.86%). Check out:

Source: Refinitiv

In the 12-month period, the dollar rose 34.94% against the real, in a performance very similar to that of Argentina, for example, where the US currency rose 32.26% in the same period.

It should be remembered that our neighbors are going through a very difficult time, with several defaults on their debts and inflation that already exceeds 42% in the accumulated 12 months to August.

Check the behavior of the main currencies in 12 months:

Source: Refinitiv

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