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The American currency is below R$ 5 against the real and is showing significant depreciation. Let’s analyze!
The dollar has declined by 11.6% since the beginning of the year. The American currency reached its lowest exchange rate in 2023 last week, at R$ 4.803. Although there was a slight increase over the weekend, the currency remains on a downward trend. So, what is driving this?
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Initially, we should consider that the dollar is influenced by internal and external factors. In the international scenario, the end of the Federal Reserve’s interest rate hike cycle in the US is one of the main causes. This movement benefits emerging countries.
Domestically, the improvement in the economic scenario, with slowing inflation, GDP growth, and the introduction of a new fiscal framework by the Federal Government, has calmed the markets.
The dollar’s return to Brazil
With a more stable economic situation, investors are reinvesting in Brazil, which leads to an influx of dollars. This results in the American currency having less strength against the real.
Moreover, the banking crisis in the first half of this year also affected the market and boosted the dollar. However, regulators intervened quickly to prevent a systemic crisis. As this tension eases, the US currency is weakening, giving the real an advantage.
Expectations for the dollar in Brazil
Although it is impossible to make certain predictions about the dollar in the coming months, the Lula Government’s policy regarding the new fiscal framework is expected to be of great importance in the Brazilian scenario. It is important to emphasize that this proposal has not yet been approved, creating uncertainty.
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If the proposal is approved, market confidence in President Lula’s (PT) adherence to the new fiscal rule will be decisive. Depending on expectations, the US currency may fluctuate upward or downward.
