Reflecting the unexpected 0.5 point drop in US interest rates and awaiting the decision on the base rate in Brazil, the financial market had another divided day. The dollar fell for the sixth time in a row and reached its lowest value in a month. The stock market fell for the second time in a row, reaching its lowest level in 35 days.
The commercial dollar closed this Wednesday (18) sold at R$5.463, down R$0.026 (-0.47%). The price was slightly down for most of the day, but plummeted after 3 pm, when the Federal Reserve (Fed, US Central Bank) surprised the market and cut the basic interest rate in the United States by 0.5 percentage points.
The US currency is at its lowest value since August 19, when it closed at R$5.41. The currency has accumulated a 3.4% drop since the 10th, but is expected to rise by 12.57% in 2024.
The relief was not repeated on the stock market. The Ibovespa index, from B3, closed at 133,748 points, down 0.9%. The drop in the international price of oil and the decline in shares of companies linked to consumption influenced trading. The indicator is at its lowest level since August 14.
Expectations surrounding interest rates in Brazil and the United States dominated the day. In addition to the Fed’s decision, the market awaits the outcome of the meeting of the Monetary Policy Committee (Copom) of the Brazilian Central Bank.
In the United States, the Fed lowered interest rates for the first time since 2020 and surprised by cutting the rate by 0.5 percentage points. Lower rates in advanced economies encourage capital flows to emerging countries.
In Brazil, Copom is doing the opposite and is expected to promote, this Wednesday, the first interest rate hike in two years. According to the Focus Bulletin, weekly survey with financial institutions disclosed by the Central Bank, the Selic rate should rise 0.25 points at this meeting.
The expectation of higher Brazilian interest rates reduces pressure on the dollar, but encourages the stock market to fall. This is because investors tend to migrate from stocks, a risky investment, to fixed income, which offers attractive rates with less risk.
* With information from Reuters
