The dollar surged nearly 2% to R$5.586 on Thursday as investors adopted defensive positions over Brazils fiscal stability concerns.At 4:30 PM, the commercial dollar increased 1.74%, reaching R$5.579 for both buying and selling.On the B3 exchange, the first-maturity dollar futures contract (DOLc1) rose 1.69%, hitting 5,591 points.
The previous day, the spot dollar closed at R$5.485, up 1.03%.Key Drivers Behind the Dollars SurgeThis weeks dollar gains stem from recent statements by President Luiz Incio Lula da Silva.In a TV Record interview on Tuesday, Lula questioned adherence to Brazils fiscal framework if more important things arise.This sparked market fears about the governments commitment to fiscal balance.
Investors are anxious about the upcoming Revenue and Expenditure Report detailing the governments zero-deficit plan.Dollar Climbs to R$5.58 Amid Brazils Fiscal Uncertainty.
(Photo Internet reproduction)Planning and Budget Minister Simone Tebet emphasized the governments policy of not spending more than it collects.This directive from President Lula should reflect in the next years budget.
Despite her reassurances, investor skepticism remains high.Global Market ContextInternationally, markets evaluated the European Central Banks (ECB) interest rate decision and United States unemployment data.The ECB kept its deposit rate unchanged at 3.75%, following a 25 basis point cut in the previous meeting.This marked the start of a long-anticipated monetary easing cycle.
ECB officials reiterated their commitment to returning eurozone inflation to the 2% target, indicating that rates would stay sufficiently restrictive for as long as necessary.In the United States , new unemployment claims data exceeded expectations, suggesting a moderating labor market.The Department of Labor reported a rise of 20,000 initial jobless claims from the previous week, totaling 243,000, above the 230,000 forecast by Reuters.These developments, combined with milder inflation figures in the second half of the year, reinforce expectations of a Federal Reserve rate cut in September.Traders are anticipating an initial cut next month, with the possibility of two more cuts by year-end.
Lower United States interest rates typically reduce the dollars appeal as Treasury yields decrease.Despite these economic indicators, the dollar index, which measures the United States currency against a basket of six others, rose 0.22% to 103.900.