The dollar was close to breaking the barrier of R$ 5 this Wednesday (9). The currency was quoted at R$ 5.0190, but ended up reversing the trend and closing up 0.59%, at R$ 5.07. In the last three trading sessions, it closed at R$ 5.04, this year’s minimum.
“The stronger-than-expected IPCA helped the currency seek lows, however, in the early hours of trading, it reversed the signal and began to rise with purchases by bank treasuries and importers, attracted by the ‘cheap’ dollar price,” said in a note Guilherme Esquelbek, from Correparti Corretora.
According to analysts, the currency may soon break the R$5 barrier, but it should not remain below this level for a long time.
“It may drop below R$5, but we don’t believe it will sustain itself at this level as we get closer to the elections, which increases the political risk,” says Rachel de Sá, Rico’s chief economics.
“The dollar can break R$ 5 and play for a long time between R$ 4.90, R$ 4.95 and R$ 5.10, but I don’t believe in a very significant drop beyond that”, says Vanei Nagem, foreign exchange analyst of Terra Investments.
Nor should the drop come on Thursday (10), when the US inflation data will be released. If the rise in US prices comes above expectations, as last month, the dollar may rise and the stock market fall, with the expectation of the end of the Fed’s stimulus (US central bank).
If the monetary authority reinforces the continuity of interest rates close to zero and the injection of liquidity into the market, the dollar tends to lose international strength. Next Wednesday, the Fed meets to set monetary policy.
“Even amid fears of inflation, investors have put buying pressure on government bonds around the world, reducing their yields. The move suggests that market participants are anticipating that, even with a saltier inflation figure, the Fed will maintain its accommodative posture, reinforcing that any pressure on prices will be transitory,” says the Guide Investimentos team in a report.
According to the broker, it is likely that the US inflation rate will exceed expectations given the strong expansion of activity, with advanced vaccination and fiscal and monetary stimuli.
On the other hand, Brazil is in a cycle of high interest rates, and lower interest rates lead to a drop in the dollar against the real through the carry trade, an investment practice in which the gain is in the difference between exchange rates and interest rates. In it, the investor takes money at a lower interest rate in one country —in this case, the United States— to apply it in another, with another currency, where the interest is higher, such as Brazil.
With the US interest rate close to zero and the Selic rate at 3.5%, with the prospect of going to 5.75% by the end of the year, there is a tendency for dollars to enter Brazil, which could reduce the exchange rate.
According to Fabrizio Velloni, chief economist at Frente Corretora, a higher-than-expected Selic increase at the next Central Bank meeting, which also takes place on Wednesday (16), may be the factor that takes the dollar below R$ 5.
“I think it goes below R$ 5, but we have some points that may not happen, such as the worsening of the pandemic and the non-effectiveness of privatizations and reforms”, says Velloni.
The reason for an eventual greater adjustment is the IPCA (Broad National Consumer Price Index), which increased 0.83% last month, after changing 0.31% in April. It was the highest result for May since 1996 (1.22%).
The market expects an adjustment of 0.75 point next Wednesday, which would raise the Selic to 4.25%.
Last week, the XP group did a scenario review and now expects a 6.50% Selic by the end of 2021, with adjustments of 0.75 point at each meeting.
The dollar projection dropped from R$ 5.30 to R$ 5.10 at the end of 2021, a level that should remain at the end of 2022.
Banco Ourinvest sees the dollar at R$ 5.20 in 2021 and R$ 5.40 in 2022.
“It will depend on the evolution of vaccination and the pandemic as usual. The situation is still too shaken for us to see a much lower dollar,” says Fernanda Consorte, chief economist at Banco Ourinvest.
Considering the factors that contribute to the value of the real and the dollar, XP’s projection points out that the currency would be around R$ 4.70.
On a downward trajectory, the dollar retreats 12.44% since its peak of R$ 5.79 in March, when Lula returned to the electoral process.
According to analysts, the drop is the result of a reduction in fiscal risk, with collections above expectations in recent months, and an improvement in the local and global economy.
“The positive surprises on the revenue side have given the government a cushion and make the market less concerned about the return of emergency aid,” says Rachel.
In addition, with the recovery of the economies of the United States and China, commodity prices are on the rise, benefiting exporting countries such as Brazil.
“The macroeconomic scenario has eased, after the announcement of a better GDP in the first quarter and even higher inflation, which, together, improve fiscal statistics. However, there are many uncertainties regarding the pandemic, in addition to new pains of head, as the probable water crisis, not to mention the political noises”, says Alexandre Espirito Santo, chief economist of Órama.
Despite the fall of the dollar, experts recommend that investors do not take it out of their portfolio, whether it is a dollar contract or a BDR, foreign stock receipt.
“It is always important to have part of the portfolio in dollars with a long-term focus,” says Rachel
On Wednesday, the Ibovespa had a marginal gain of 0.09%, to 129,906.80 points, driven particularly by Vale, which rose 2.07%, in the wake of the improvement in iron ore prices in China. The benchmark contract on the Chinese Dalian Stock Exchange rose 5.4% after a three-day low.
With the IPCA higher than expected, which raises future interest rates, MRV and Cyrela dropped 2.44% and 2.33%, respectively. In the same context, Iguatemi and Multiplan dropped 3.78% and 2.8%, respectively.
Given the caution with the US inflation data, the US indices closed slightly down. The S&P 500 fell 0.18%, the Dow Jones 0.44% and the Nasdaq 0.09%.