The day after interest rates rose in Brazil and rates were cut in the United States, the dollar approached R$5.40 and closed at its lowest value in a month. The stock market fell for the third day in a row, to 133,000 points.
The commercial dollar closed this Wednesday (19) sold at R$5.424, down R$0.038 (-0.7%). The price fell throughout the session. At the lowest point of the day, around 1 pm, it reached R$5.40.
The US currency is at its lowest level since August 19. The currency has fallen 3.7% in September, but is expected to rise 11.76% in 2024.
The increase in interest rates in Brazil did not benefit the stock market. The Ibovespa index, from B3, closed at 133,123 points, down 0.47%. Despite the rise in oil and mining stocks, consumer-related stocks fell due to expectations that the Central Bank will be more aggressive in its interest rate hike policy. The indicator is at its lowest level since August 13.
Interest rate decisions in Brazil and the United States dominated the day. In the United States, the Federal Reserve (Fed, the US central bank) lowered interest rates for the first time since 2020. The agency surprised by cutting the rate by 0.5 percentage points. Lower rates in advanced economies encourage capital flows to emerging countries.
In Brazil, Copom takes the opposite path and promotes the first interest rate hike in two years. The Selic rate (the economy’s basic interest rate) rose from 10.5% to 10.75% per year.
The increase in the difference between Brazilian and US interest rates favors the fall of the dollar. This is because investors withdraw money from countries with lower rates to invest in countries with higher rates.
On the stock exchange, higher interest rates in Brazil discourage investors from investing in stocks, seeking fixed-income investments, which have lower risk. The aggressive tone of the Monetary Policy Committee’s (Copom) statement, according to market analysts, indicated that the Central Bank may be more aggressive in upcoming meetings, which encourages the sale of stocks.
*With information from Reuters
