Primary surplus target reduction has pushed dollar price in Brazilian market
Dollar quotation rose more than 2% in Brazil since the government has announced on Thursday (July 23) the primary surplus target reduction to 0.15% of GDP. This Friday (July 24), in the morning, the dollar price had already reached R$3.34. For Silvio Campos Neto, an economist at Tendência Consultoria (Consulting Trend), the rise has increased market perception of the possibility of lowering Brazilian economy in credit rating agencies. “The natural effect is the rise of risk and of exchange rate itself. The problem is that all the credit rating agencies can revise not the grade, but Brazil's perspective,” Campos Neto pointed out. According to him, the external environment is also very volatile and at the moment two factors have not played a positive role for Brazil. One of them is the recent crisis in the Chinese stock market, with shares sharply dropping. And the other factor is the expected increase of interest that may happen in the coming months in the US economy. For him, this would attract investors to the country, which would put a bias to the rise in dollar not only in Brazil, but around the world.
Zeina Latiff, an economist at XP investimentos (XP investments), has also pointed out that at the moment when there is a risk of lowering the credit rating of Brazil, there is obviously a pressure on the exchange rate. According to her, the market begins to “price” the change.
For the president of the Federal Economic Council, Paulo Dantas da Costa, the exchange rate is a result of supply and demand. According to Central Bank, the number of dollars that has left the country is higher than the number that has entered this month and the negative balance has reached $2.363 billion. Costa noted that the entry of foreign money has decreased because residents are betting less on the economic health of the country. Moreover Costa identifies a “somewhat speculative” situation as a result of the political environment.
When contacted, the spokesperson for the Ministry of Finance has declined to comment on the fluctuation of dollar "for being a typical subject of the Central Bank". The Central Bank by its turn has also declined to comment.
Translated by Amarílis Anchieta
Fonte: Primary surplus target reduction has pushed dollar price in Brazilian market
