Driven by inflation within expectations in Brazil and external optimism, the financial market had a day of recovery. The dollar fell to the lowest level since the beginning of November, and the stock exchange recovered 109 thousand points, having the best week since October.
The commercial dollar ended this Friday (23) sold at R$ 5.166, with a decrease of R$ 0.019 (-0.38%). The quotation operated downwards throughout the session, falling to R$ 5.12 at the low of the day, around 12:30 pm. During the afternoon, the currency regained territory, but kept falling.
With today’s performance, the US currency closed the week down 2.4%. The dollar accumulates a drop of 0.69% in December and 7.35% in 2022.
In the stock market, the day was marked by euphoria. The B3 Ibovespa index closed at 109,698 points, up 2%. The indicator is at the highest level since December 6 and was boosted by shares of companies in the financial sector and state-owned companies. This week alone, the Ibovespa rose 6.7%, the highest since the third week of October.
Both internal and external factors contributed to the relief in the financial market. In Brazil, the announcement that the IPCA-15, the inflation preview index, stood at 0.52% in December encouraged investors. The indicator came in as expected and confirmed the deceleration of inflation.
The market also continues to echo the approval of the Transition’s constitutional amendment, effective for just one year. Limiting the effects of the amendment, which removes up to BRL 168 billion from the spending ceiling in 2023, reduces the impact on public accounts in relation to what was announced when the proposal was sent, which would initially be valid for four years.
Abroad, the deceleration of producer inflation in the United States partially undone the pessimism of recent days in the foreign market. This week, there was mixed data regarding the planet’s largest economy, with Gross Domestic Product growing more than expected and unemployment claims lower than expected.
The heating up of the economy and the labor market had increased the pressure for the Federal Reserve (Fed, North American Central Bank) to keep interest rates high for longer than expected. However, the inflation numbers are starting to show that the monetary tightening in the United States is having an effect. Higher rates in advanced economies encourage capital flight from emerging countries such as Brazil.
* with information from Reuters
