Dollar falls for the 6th session in Brazil and reaches its lowest value since October.
The US dollar has fallen by 8,15% this year.
SAO PAULO (Reuters) - The dollar recorded its sixth consecutive session of decline in Brazil, closing Tuesday at its lowest value since October of last year, amid an inflow of capital into the country and a weakening of the US currency abroad in the afternoon.
In another generally positive session for Brazilian assets, the spot dollar closed down 0,19%, at R$5,6755, its lowest rate since October 24, when it closed at R$5,6635. Over the last six sessions, the dollar has accumulated a decline of 3,06%.
The dollar has fallen 8,15% this year.
At 17:21 PM on the B3 exchange, the dollar for April – currently the most liquid in Brazil – was down 0,31%, at R$5,6880.
After opening higher, following the positive trend for the US dollar abroad, the dollar gradually lost strength against the real, with professionals citing an inflow of capital into the country.
“We had an influx of exporters and foreign investors,” commented Jefferson Rugik, director of Correparti Corretora, during the afternoon. “In recent days we have had speculative flows coming to Brazil, because the interest rate differential here is high, which attracts investors,” he added, noting that on Wednesday the Monetary Policy Committee (Copom) of the Central Bank is expected to announce a new increase in the basic Selic rate, currently at 13,25% per year.
In the afternoon, the US currency also weakened abroad, which caused the dollar to hit new lows in Brazil. After reaching a high of R$5,7153 (+0,51%) at 9:01 am, at the opening of the session, the spot dollar hit a low of R$5,6558 (-0,53%) at 13:20 pm.
As in previous sessions, the strengthening of the real against the dollar was in line with the rise in the Ibovespa and the fall in DI (Interbank Deposit) rates.
The new drop in the dollar against the real occurred despite a factor that, at the end of 2024, was the reason for a sharp rise in exchange rates: the government's intention to exempt from income tax people who earn up to R$5 per month.
While in December the proposal was seen as yet another risk factor for fiscal balance, the official presentation of the bill to Congress this Tuesday did not put pressure on businesses.
The project maintains the progressive income tax table with an exemption for incomes up to two minimum wages, which will be combined with a variable discount that will allow those earning up to R$5 to pay no tax. There will also be a partial discount that will be gradually reduced for incomes from R$5 to R$7.
On the other hand, for high-income individuals, the bill provides for a 10% withholding tax on dividends distributed by a company to the same individual exceeding R$50 per month. Wealthier taxpayers will pay the minimum tax on total annual income exceeding R$600.
According to the government, the final effect on public finances will be neutral, meaning that the revenue from the wealthiest segment of the population will compensate for the tax exemption given to the poorest segment – precisely the point that generates distrust in the market.
Abroad, at 17:20 PM, the dollar index -- which measures the performance of the US currency against a basket of six currencies -- was down 0,23%, at 103,220.
