Lula's likely return brings back confidence and the dollar falls to R$ 5,30, its lowest value in four months.
The Brazilian currency tends to appreciate, reducing inflation, if Brazil returns to having a serious government.
247 - The possible return of former president Luiz Inácio Lula da Silva to power is already restoring confidence to Brazil, causing the dollar exchange rate to fall to R$ 5,30 yesterday. During Lula's government, Brazil experienced the greatest cycle of prosperity, social inclusion, and appreciation of Brazilian assets in its entire history, and his likely return is already being anticipated by the markets, even though panic-mongering operators are talking about "Lula risk" to manipulate the unwary. Below, a report on the fall of the US currency:
Brazil Agency – Benefiting from the flow of resources to emerging countries, the dollar approached R$ 5,30 and closed today (31) at its lowest value in four months. The Stock Exchange had a slight increase, but ended January with the biggest gain in more than a year.
The commercial dollar closed this Monday at R$ 5.306, down R$ 0,084 (-1,56%). The exchange rate opened near stability, but plummeted after the opening of the US market. At its lowest point of the day, around 1:15 pm, it reached R$ 5,28.
The US dollar is at its lowest value since September 22nd of last year, when it stood at R$ 5,304. With today's performance, the currency ended January with a decline of 4,84%. This was the largest monthly gain since November 2020.
On January 5th, the dollar reached a selling price of R$ 5,71, during a period of nervousness in the global financial market. Since then, the exchange rate has fallen 7,11%.
The stock market also had a calm day. The Ibovespa index, from B3 (Stock Exchange), recovered part of the losses from Friday (28) and closed the day at 112.144 points, with a gain of 0,21%. The stock exchange ended January with a rise of 6,98%, the best monthly performance since December 2020, when it had risen 9,3%.
Interest
Despite expectations that the Federal Reserve (Fed, the US central bank) will raise interest rates starting in March, the prevailing understanding is that the effects of the increase on emerging countries are already priced in (incorporated into asset prices).
Traditionally, high interest rates in advanced economies encourage capital flight from emerging markets, but some investors have realized that stocks and currencies of developing countries have become very cheap in recent months.
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