The dollar halts its highest level in six years and falls by 1.13%

The dollar crossed a string of six consecutive highs and closed with the lowest of its 13 sessions, dropping 1.13% on Wednesday to 23, to R $ 3.77624. The fall of the US currency in several emerging countries, such as Turkey, Mexico and South Africa, helped lift the pressure on the currency here, but the dollar hit a trough in the US dollar. afternoon with the statements of the Minister of Economy, Paulo Guedes. In an interview, the economist said it would eliminate the primary deficit this year through privatizations, which could bring at least $ 20 billion to the country, as well as an additional $ 10 billion from subsidy cuts . In addition, he stressed that pension reform was the number one priority of the new government.

Jair Bolsonaro, also earlier in Davos, told investors that the pension reform was already going to Congress in the first week of work of parliamentarians, who are returning from the break on 1 February. The statements prompted investors to dismantle more defensive dollar positions, according to traders, who also announced an attempt by the exporters to sell the currency as the dollar reached the top of the day at $ 3.81.

Thus, the cancellation of a press conference given by Bolsonaro and his ministers in the afternoon in Davos had no impact on the price. On the contrary, the country risk has decreased, which has also helped to reduce the pressure exerted by the exchange rate. Brazil's five-year credit default swap dropped to 176 basis points from Tuesday's 176, according to IHS Markit.

Despite the government's efforts to rebadure foreign investors in Davos on the progress of the reforms, the Royal Bank of Canada (RBC) strategist for Latin American currencies, Tania Escobedo, sees an excess of money. Investor optimism, especially the local, with the outlook for welfare and maintains the forecast that the dollar could approach home by R $ 4.00 in the first half. "Brazil has never had a room as fragmented as the one elected in 2018," she said, noting that the pbadage of the text should not be as simple as that expected by many investors.

For the economist, Bolsonaro has the first quarter to approve a pension reform with a relevant tax saving. "After that, your political capital may decline and the chances of successful congressional negotiations are quickly reduced." The RBC strategist sees only foreigners providing resources in Brazil more consistently once Bolsonaro gives concrete examples of program progress, with the approval of reforms. The figures released Wednesday by the Central Bank show that the influx of dollars this month is still shy compared to the same month of previous periods. Up to 18, the exchange rate is positive at $ 1.2 billion. During the same period, early 2018, US $ 4.4 billion was spent.