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Dollar rises to R$5.24 amid fears of recession abroad

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The truce in the financial market was short-lived. One day after falling sharply, the dollar had its biggest daily rise since April and returned to R$5.25. The stock market fell more than 2% and closed at its lowest level in a week.

The commercial dollar closed this Friday (23) sold at R$ 5.249, with a strong increase of R$ 0.134 (2.62%). The price started the day at R$ 5.17 and accelerated in the following hours. At the peak of the day, around 4pm, the US currency reached R$5.26.

The Central Bank intervened in the market and sold US$ 2 billion of international reserves combined with repurchase auctions on the interbank market. This type of operation has not been done since the end of 2021.

The currency had its biggest daily appreciation since April 22, when it had risen 4.07%. Even with today’s strong rise, the dollar closed the week with a drop of 0.24%. In 2022, the US currency accumulates a decline of 5.86%.

The day was also turbulent in the stock market. The B3 Ibovespa index closed at 111,716 points, down 2.06%. Despite the fall, the indicator rose 2.23% in the week, stimulated by the end of the cycle of high Selic rate (basic interest rates), which made the Brazilian stock market jump yesterday (22).

The global financial market had a day of instability after the release of economic data indicating that Europe is entering a recession. In addition to the escalation in tensions between Russia and Ukraine, the disclosure that purchase intentions by managers (an index used to measure where the economy is going) fell on the continent, worsening the mood.

At the same time, the pound sterling fell to its lowest level in 37 years following the announcement of tax cut measures by the new UK government. Announced by the new prime minister, Liz Truss, the measures were poorly received by the market because they will raise the country’s public debt.

Global recession fears impacted international oil prices. The price of a barrel of the Brent type, used in international negotiations, dropped more than 4% today and closed at US$ 86.57. This is the lowest level since January, before the start of the war in Eastern Europe.

* With information from Reuters

Translated to english by RJ983

From Brazil, by EBC News

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