The political chaos that ensued in Brazil made the Central Bank (BC) “burn” US $ 5.4 billion in the last three days to try to hold the dollar’s quotations in Brazil. But the battery of BC currency auctions, which have intensified since last Wednesday, have been unable to calm the market so far.

In the early afternoon of this Friday, 24, the dollar in sight rose 3.5% against the real, to R $ 5.7229. In some exchange brokers in Brasília, the tourism dollar is already sold at R $ 6.21 and, in São Paulo, at US $ 6.15.

The pressure on the exchange rate reflects investors’ doubts about the political future of President Jair Bolsonaro’s government, after the resignation of Justice Minister Sérgio Moro, made official on Friday. In the last few days, statements by BC President Roberto Campos Neto also weighed in an interview with Estadão Live Talks last Monday, 20. On that occasion, he signaled a new cut in the Selic (the basic interest rate), currently at 3, 75% per year. In addition, the vision arose that the Minister of Economy, Paulo Guedes, lost prestige and may be the next to leave the government.

Amid the prospect that the basic interest rate (Selic) may fall to 3% per year in early May, when the BC Monetary Policy Committee (Copom) meets, the dollar’s rise against the real intensified in Wednesday. Behind the move is investors’ assessment that, with lower interest rates, Brazil will become even less attractive to international capital.

Also on Wednesday, the chief minister of the Civil House, general Walter Braga Netto, announced at an event in Planalto an investment plan of R $ 300 billion for the economic recovery of post-pandemic Brazil. The detail is that no member of the Ministry of Economy participated in the announcement. Guedes’ team, in fact, sees with concern the possibility of the government launching an investment plan, since there are no resources for that.

To reduce pressure on the currency on Wednesday, the BC sold a total of $ 880 million in currency swaps. There were two operations. The swap is a type of contract that, when traded, has the equivalent effect of selling dollars in the future market. Even so, the spot dollar rose 1.90% to R $ 5.4087.

The perception that Minister Paulo Guedes lost prestige gave the dollar a new boost against the real on Thursday. The view of most economists and financial market operators is that the Bolsonaro government can take a turn in the economic area, abandoning the liberal orientation of the Guedes team in favor of a more developmentalist stance, anchored in state investment. The situation worsened amid news that the Minister of Justice, Sergio Moro, could resign.

Again, in order to reduce exchange rate volatility, the Central Bank sold a total of US $ 1.900 billion in swap contracts to the market, in four operations spread throughout the day. It did not help: the spot dollar ended the session up 2.22%, at R $ 5.4087.


This Friday, the pressure on the exchange continued to increase. After the Diário Oficial da União brought, during the night, the dismissal of Maurício Valeixo from the post of director-general of the Federal Police (PF), it was clear to the financial market that Moro would leave the government. The minister did not accept that Bolsonaro imposed the departure of Valeixo, his man of confidence in the PF.

To put out the fire, the BC began to operate in the exchange rate at the beginning of the session. Currency auctions were intensified after 11 am, when Moro made his departure official in an interview. Thus, by the beginning of the afternoon, the BC had already carried out three swap auctions in the amount of R $ 1,400 billion, two line auctions (sale of dollars with a repurchase commitment in the future) totaling US $ 700 million and one operation cash sales of US $ 545 million in international reserves. Only today, so far, the BC has already made sales of US $ 2.645 billion.

Considering the last three days, operations totaled US $ 5.375 billion. Still, the dollar has been breaking records against the real. At the peak of this Friday, the American currency in cash was quoted at R $ 5.7344 – the highest nominal value in history.


The operations carried out by the BC have an impact on the Brazilian foreign exchange position, at a time when the country is already facing a natural movement of dollars to escape to other countries, in the wake of the new coronavirus pandemic.

At the end of February, when the effects of the pandemic on the economy were still insipient, the BC’s net foreign exchange position totaled US $ 329.061 billion. The value reflects what is available for the BC to face some foreign currency need – how to provide liquidity to the market in times of crisis such as the current one, for example. The position takes into account international reserves, the BC’s line of operations stock, the institution’s position in foreign exchange swap and Brazil’s Special Drawing Rights (DES) in the International Monetary Fund (IMF).

On April 17 (last Friday), the BC’s foreign exchange position was already at US $ 310.8 billion. In practice, since the end of February there has been a fall of 5.54% in this position, equivalent to US $ 18.2 billion. This is the effect – only partial – of the “insurance” crises that Brazil has in the exchange area. This week’s operations have not yet entered the market, mainly with swaps and cash sales, which further reduced the BC’s foreign exchange position.

In parallel, the country may face an even greater scarcity of foreign currency resources in the coming months. This Friday morning, in a regular release of statistical data, the BC reported that Direct Investment in the Country (IDP) in April, until the 22nd, is US $ 1.053 billion. The IDP represents the investment made by foreigners in the Brazilian productive sector.

The partial value of April is different from that recorded in previous months, when the country had consistent IDP flows. In March, for example, despite the advance of the pandemic, the IDP still totaled US $ 7.621 billion.

In practice, the most recent data from the IDP suggests that foreigners are holding back on productive investments in Brazil, at least for the first time.

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