The dollar closed the week accumulating a fall of 4.44%. It was the biggest drop since the week of September 30, 2018, when it fell 4.81%. Friday’s trading session was marked by the expectation of the Supreme Court’s decision to release the video of the meeting of Jair Bolsonaro and his ministers on April 22, which left the market cautious and oscillating close to stability this afternoon. At 5 pm, the Supreme Court authorized the disclosure, but the immediate reaction on the exchange rate was modest, with the tables still evaluating the content of the video. In previous trading sessions, less political tension and a favorable external environment helped to remove pressure from the exchange rate. As a result, the real had the best weekly performance against emerging currencies.
The trading desks have already started on Friday in anticipation of the decision on the video and the turnover was below average in the morning. Statements by the director of the Central Bank’s Economic Policy director, Fábio Kanczuk, that the institution is “very well prepared” to correct distortions in the foreign exchange market, mainly due to the level of international reserves, helped to remove pressure on the exchange rate, echoing what the institution’s president, Roberto Campos Neto, had said on Wednesday night. This Friday, the spot dollar closed practically stable (-0.04%), at R $ 5.5797. The dollar for June fell 0.34%, to R $ 5.5370 at 5:35 pm.
Citi’s New York strategists estimate that the video of the ministerial meeting cited by former minister Sergio Moro potentially creates elements for Bolsonaro’s impeachment process, hence the expectation. Regarding the milder climate between Bolsonaro, Congress and the governors may not last long, considering the rapid spread of the coronavirus in the country.
Outside, the mood was also cautious, after China introduced the controversial National Security Law to Hong Kong at the opening of the National People’s Congress. Washington was against and the dollar strengthened.
“China confronted Trump with the Hong Kong decision and led investors to seek security in the dollar,” says currency analyst at Western Union, a bank specializing in international transfers, Joe Manimbo. The DXY index, which measures the US currency against strong currencies, operated all day high and came close to the 100 point level. In the emerging markets, the dollar rose against most, with one of the few exceptions remaining with Mexico, where it fell 0.47% today.
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