
The dollar plunged more than 1.5% against the real on Wednesday, falling below 5.95 reais, as investors unwound defensive positions in the market and digested the possibility of a more dovish trade policy than previously expected by United States President Donald Trump.
Dollar regresses below R$ 5.95
At 12:20 p.m., the spot dollar fell 1.54%, to 5.9386 reais, marking the second time this year that it fell below 6.00 reais. On B3, the first-maturity dollar futures contract fell -1.41%, to 5.951.5 reais on sale.
For yet another session, investors remain focused on news from the world's largest economy, where Trump began his new administration by signing a series of executive orders and announcing plans for the coming weeks.
Markets monitor US trade policy
Markets have been paying close attention to any indication of what the approach will be. new US government for trade policy, since the promise of imposing import tariffs was at the center of the Republican's presidential campaign.
Despite renewing his tariff threats in his first days in office, Trump has so far only directed federal agencies to investigate U.S. trade deficits and unfair trade practices by partners.
The day before, for example, Trump promised to hit the European Union with tariffs. He also said his administration was discussing a 10% tariff on Chinese imports. However, these threats seemed to have little effect on markets due to the lack of more concrete measures.
“Despite the bravado and factoids, Trump seems to be following the line of his first term. And that is good for the market,” said Fernando Bergallo, chief operating officer at FB Capital.
“Regarding tariffs, so far it seems that Brazil is outside of this tightening movement,” he added.
In addition to threats to China and the EU, Trump has also signaled the possibility of imposing tariffs on Mexico and Canada, but other countries, such as Brazil, have remained out of the president's sights for now. He has, however, suggested implementing universal tariffs.
Natural correction in the foreign exchange market
In the weeks leading up to Trump's inauguration, the US currency had soared globally due to the perception that the tariffs promised by the president would be inflationary, which would force the Federal Reserve to keep interest rates high.
As a result, amid a more moderate approach than previously expected, investors have taken some of the price out of the dollar.
The dollar index - which measures the performance of the US currency against a basket of six currencies - fell just 0.01% to 108.130, but was hovering near its lowest levels in three weeks.
On the domestic scene, the beginning of the year continues to be marked by a lack of momentum, in addition to a large overlap of news arriving from the US.
Fiscal impacts and outlook for 2025
Analysts point out that the market's main concern is still the fiscal scenario. Financial agents are expressing doubts about the government's commitment to balancing public accounts. This feeling of uncertainty has only increased since the end of last year.
However, some market participants have been pointing out that the dollar's surge in 2024 was an exaggerated move, driven by fiscal fears. During that period, the US currency came close to R$ 6.30. In December, the dollar reached its all-time high, trading at R$ 6.2679.
Earlier this year, this overpricing was reportedly paving the way for a sharp correction.
“It’s a natural movement, which was bound to happen at some point. The fiscal situation is bad, but not bad enough for the defensive demand we had,” said Bergallo.
On the fiscal issue, the Secretary of the National Treasury pointed out earlier that the government may present new fiscal measures, after Congress approved spending containment proposals last month, if it deems them necessary to meet this year's fiscal targets.
Speaking in an interview with Rádio Gaúcha, he stated that the government is currently taking stock of what was approved in 2024 to assess whether there is a need to present additional measures.
Source: Fernando Cardoso | Notícias Agrícolas