The dollar fell against the real on a day of adjustments after Trump softened his tone regarding China.
The US dollar closed down 0,79%, at R$ 5,4603.
(Reuters)- After surging more than 2% in the previous session, the dollar underwent adjustments in Brazil on Monday and closed the day below R$5,50, after US President Donald Trump softened his rhetoric regarding China.
The US dollar closed down 0,79% at R$5,4603. Year-to-date, the currency has fallen 11,63%.
At 17:03 PM, on the B3 exchange, the dollar for November – currently the most liquid in Brazil – was down 1,28%, at R$5,4880.
On Friday, Trump announced a 100% tariff on goods purchased from China and the imposition of export controls on critical software from the Asian country, in yet another episode of the trade war between the two nations. A day earlier, China had already increased controls on the export of rare earth elements – essential materials for various sectors of American industry.
On Sunday, however, Trump adopted a conciliatory tone, saying that the US does not want to harm China. Comments by US Treasury Secretary Scott Bessent during an interview on Monday reinforced the message of accommodation.
“There has been a significant de-escalation of the situation,” Bessent said. “President Trump said the tariffs will not go into effect until November 1st. He will meet with the party chairman, Xi (Jinping), in Korea. I believe that meeting will still take place,” Bessent said.
In response, investors sought higher-risk assets, such as stocks and currencies of emerging countries, including the Brazilian real, the South African rand, the Mexican peso, and the Chilean peso.
The spot dollar hit its lowest rate of the session, at R$5,4426 (-1,11%), at 14:46 PM. Even so, the currency was far from recovering all the gains seen on Friday, after Trump threatened China.
“The combination of rising stock markets, appreciation of emerging market currencies, and recovery in commodities – especially oil and iron ore – favors the real. The main boost comes from Donald Trump's softer tone towards China, after backing down from the threat of imposing 100% tariffs, which reduced trade tensions,” summarized Bruno Shahini, investment specialist at Nomad, in a written commentary.
The Columbus Day holiday in the United States, which kept the Treasury market closed, limited global liquidity. Late in the afternoon, at 17:06 PM, the dollar index – which measures the performance of the US currency against a basket of six strong currencies – was up 0,25%, at 99,297, affected by the fall of the euro.
In the morning, the Central Bank held two simultaneous line auctions (dollar sales with a repurchase commitment) to roll over the maturity of November 4th. US$1 billion was sold in the operations.
In addition, the Central Bank sold 40.000 currency swap contracts to roll over the maturity of November 3rd.
