MercoPress. South Atlantic News Agency
Brazil's real recovers against US dollar
Brazil's Central Bank sold US$ 5 billion to stabilize the exchange rate Brazil's Central Bank (BCB) successfully maneuvered Thursday and got the US dollar to fall against the local real after volatility gripped financial markets amid President Luiz Inácio Lula da Silva's planned taxation reforms, Agencia Brasil reported. The US currency closed at R$ 6.12 following Congressional approval of the Government's legal package.
After a day of lull in the financial market, the dollar fell sharply, thus reflecting the Central Bank's (BC) record intervention in the exchange rate and the approval of part of the spending cut package in the Lower House. The stock market started the day strongly but lost momentum towards the end of trading and recorded a small rise.
The commercial dollar closed Thursday at R$ 6.122, down R$ 0.146 (-2.32%). Despite the drop, the closing value is the second highest in the real's history, second only to the day before, when it closed at R$ 6.26. (See also: https://en.mercopress.com/2024/12/18/us-dollar-soars-in-brazil-amid-fiscal-uncertainty )
On Thursday, the exchange rate reached R$ 6.28 at around 10.15 am but began to fall after the Central Bank sold US$ 5 billion from international reserves in two auctions.
The currency traded around R$ 6.14 in the early afternoon and fell even further after the House approved the proposed amendment to the Constitution (PEC) for the government's spending cut package. The large margin favoring the vote (354 votes in the first round and 348 in the second) brought relief. At the day's low, around 3.45 pm, the price reached R$ 6.10.
The stock market had a day of slight recovery. After reaching its lowest level in six months the day before, B3's Ibovespa index closed at 121,188 points, up 0.34%.
At around 1.30 pm, the index reached 0.82%, but lost momentum in the afternoon, pressured by US stock markets, which closed close to stable.
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Read all commentsWishful thinking: https://www.msn.com/en-us/money/economy/brazil-s-wealthy-lament-political-dysfunction-as-fortunes-tumble/ar-AA1we63Y
Dec 20th, 2024 - 05:46 pm 0As msn (and not this MP article) reports, “. . .the country’s fiscal deficit swelled to nearly 10% of gross domestic product.” Where the issue is appears clear: “the problem is mostly political” and “ . . .lawmakers were dragging their feet and the government has failed to show enough urgency to address the deteriorating fiscal situation.” And while the rich have ways to evade this disaster, it is the core of society that bears the brunt: “A median income earner in Brazil will be far more vulnerable to the depreciation.” Will Brazil be turned into a basket case like Argentina was, before a turnaround? Let's hope not.
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