After surpassing historical mark, the dollar has slightly fallen. Last Tuesday, when trading at BRL 4.2771, it surpassed the previous intraday high of BRL 4.2484, obtained on September 24, 2015. Minister of Economy Paulo Guedes’ statement that a tighter fiscal policy and low interest rates push the dollar to a higher balance level stimulated a speculative buying movement. The intervention of the Central Bank drove the US currency away from the highs, but did not prevent the dollar from remaining high, closing Friday sold at BRL 4.2410. The dispute for the formation of the month-end Ptax rate helped spark market volatility.
The fact is that the dollar is very stretched. It rose 1.2% last week and accumulated gains of 5.6% in November. The negative dollar flow, with greater outflow than inflow, prompts support to the exchange rate. This lack of dollars explains this change in the level of operations in the forex market. The ‘Guedes effect’ justifies the recent speculative movement. On the other hand, the sign of a greater intervention by the Central Bank serves as counterpoint and opens room for some profit taking, especially on the eve of the Thanksgiving holiday in the US.
Generally speaking, the short-term expectation is of some stabilization. Technically, the dollar opened a gap above BRL 4.22, which serves as first support. The bullish challenge is to beat the resistance at BRL 4.2770. In the long run, there ate the issues of the US and China trade impasse and the progress of interest rates and their impact on currency flows. The Focus projects the dollar at BRL 4.10 at the end of the year.