Dollar sets new record, reaches R$5.84 after interest cut

BRASILIA, Brazil, 08 May 2020 /PRNewswire Policy/ — The commercial dollar closed out this Thursday (7) at R$5.84, up R$0.136 (+2.39%),…

BRASILIA, Brazil, 08 May 2020 /PRNewswire Policy/ — The commercial dollar closed out this Thursday (7) at R$5.84, up R$0.136 (+2.39%), the highest nominal value (inflation not considered) since the real was created. The US currency is up 45.52 percent since the beginning of 2020.

The exit of funds from the country, which had the exchange rate under pressure and led the dollar to reach a new record, was explained by a larger-than-expected slash in the country’s benchmark interest rate, the Selic.

In addition to cutting the rate from 3.75 to three percent—a slash more significant than had been estimated by investors—the Central Bank indicated that it plans to carry out a new reduction of up to 0.75 percentage points in June, which would bring the Selic down to 2.25 percent a year. Lower interest make investing in emerging countries, like Brazil, less appealing, and stimulates the withdrawal of foreign capital.

SOURCE Agência Brasil – Empresa Brasil de Comunicação S/A – EBC

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