The dollar started the week with strong gains, operating comfortably above the mark of 5.30 reais on Monday marked by risk aversion abroad, while in Brazil, the final stretch of the electoral race collaborated to the caution of investors.
At 9:51 am (Brasília), the spot dollar advanced 1.02% to 5.3017 reais on sale, after earlier rising 1.82% to 5.3440 reais, a level not seen since July 27.
On the B3 (BVMF:B3SA3), at 9:51 am (Brasília), the future dollar contract of first maturity was up 0.78% at 5.3095 reais.
The U.S. currency rose for the second consecutive day, after closing the last session up 2.59%, at 5.2483 reais on sale, the highest daily valuation since April 22 (+4.07%) and the highest level for closing since the 16th (5.2609 reais).
“Investors still (are) worried about the consequence that monetary tightening by the world’s major central banks could lead to economies, a recession,” said Jefferson Rugik, CEO of Correparti Corretora, noting the dollar’s strengthening abroad.
An index of the U.S. currency against a basket of six strong peers was up 0.4 percent on Monday, as it renewed a two-decade high. At the same time, the dollar was trading higher against all major commodity-related and emerging-country currencies.
The Brazilian real shared the worst overall performance position on the day with the Chilean peso.
Investors have been fleeing risky assets quickly in recent days, especially since the Federal Reserve raised its interest rate by 0.75 percentage points for the third time in a row last Wednesday and projected a more aggressive monetary tightening path than markets initially expected.
Higher interest rates in the US benefit the dollar by making US fixed income returns more interesting to foreign capital, and have also triggered recession fears as they tend to restrict business and household spending.
With the release of inflation data from the main economies and speeches from central bank leaders scheduled for the coming days, “the week promises to be challenging… a full plate for amplitude and volatility” in the exchange rate oscillations, Rugik added, also calling attention, at the domestic level, to Sunday’s presidential elections.
The last week of the campaign before the first round will be marked by an avalanche of electoral polls, with all eyes turned to possible indications about the chances of the leader of the polls Luiz Inácio Lula da Silva (PT) to settle the score on October 2.
Analysts at Genial Investimentos also highlighted in a report the local agenda of indicators this week, which will bring the readings of the IPCA-15 for September and the August producer price index, unemployment data, debt and credit reports and fiscal data.