Besides following the external scene, the foreign exchange market also reflected the attempt of rapprochement between the executive and legislative branches. The release of the awaited video of the ministerial meeting, at first, did not bring great news. This tends to reduce the risk of impeachment, which can alleviate the exchange rate premium and thereby put pressure on the dollar early this week. It is good to remember that Monday is a holiday in the United States (Memorial Day), which normally removes liquidity from the forex market. The U.S. currency ended Friday (22) practically stable, sold at BRL 5.5760 (-0.08%). For the week, it dropped by 4.45%.
The uncertainties surrounding the duration of the quarantine and the size of the damage caused by the pandemic justify the caution of most traders. The fact is that many financial institutions are raising the projection of decline for Brazilian GDP, and this pessimism must continue to weigh on the exchange rate.
It also worries about the increase in fiscal risk, given the stagnation of the reform agenda and growth in public spending. And finally, the aggressiveness of Brazil’s Central Bank, with traders projecting a new cut in the Selic rate in June. This confusing scenario ends up leading to upward revisions in the dollar projection for the end of the year.