Home Politics 2018 elections Central Bank Intervenes and Drops Dollar Quotation

Central Bank Intervenes and Drops Dollar Quotation


Political uncertainty and oil fall keeps Ibovespa down

After a 1% increase at the opening, the Ibovespa lost strength and has fallen to 0.16%, at 73,030 points, at 11:30 am EDT on Monday Jun. 11st, with Petrobras shares falling following the devaluation of commodities and the banks’ turnaround, with the shares of Bradesco and Itaú retreating in this late morning. Meanwhile, the dollar, which was at a slight high, went into a downtrend as it left behind the $ 3.70 amid the interventions of the Central Bank.

In order to contain the strong appreciation of the dollar at the beginning of this month, BC President Ilan Goldfajn announced a strong intervention in the market last Thursday (7), and until the end of this week there will be additional swap contract auctions equivalent to the sale of dollars in the futures market, in the total amount of US $ 20 billion. The BC president did not rule out adopting other exchange intervention measures, such as the use of the country’s $ 380 billion international reserves to inject the dollar into the market, or the sale of so-called line contracts.

For this Monday, the BC offers up to 8,800 swap contracts for rollover and announced this morning that it will hold an additional auction of 50,000 contracts, in line with the done last Friday and that made the dollar plummet 5.1 %. With the additional intervention, future dollar contracts traded maturing in July fell 0.71% to R $ 3,689.

In the same direction, future interest rates continue with the adjustment process, with DIs due in January 2019, marking a drop of 9 basis points at 7.12%. To contain the surge in contracts, the Treasury did exactly what the market was “asking for” and offering liquidity to investors who want to zero their positions. Daily auctions of titles will be held this week, and next Friday will be evaluated a possible change of periodicity.

The Datafolha survey released last Sunday Jun. 10th reiterated Jair Bolsonaro’s leadership in scenarios without Lula, but only in the first round, pointing to an indefinite picture and not confirming the trends pointed out in other polls and that worried the market, such as favoritism of Ciro Gomes to go to the 2nd round against Bolsonaro and Fernando Haddad’s growth, which would be the option of the Workers Party, if Lula da Silva is prevented.

The survey pointed to Bolsonaro leading with 19% the intentions of vote in the first round in scenarios without the ex-president, before 17% in April, followed by Marina Silva (Network) with 14% to 15%. Ciro appears behind Marina in the research, Fernando Haddad also did not repeat promising performance of previous surveys, while Geraldo Alckmin remains stagnant with 7%.

In the simulations for the second round, in the scenario without Lula, Bolsonaro is tied technically with Ciro (34% vs. 34%) and Geraldo Alckmin (33% each), while losing Marina Silva (32% vs. 42%). According to the survey, the deputy would beat only Haddad (36% to 27%).

After a strong start, Petrobras shares lost strength in the face of a 1% drop in oil prices on the international market, while financial sector shares returned the opening gains, highlighting the 1% drop in B3 shares . On the negative side, attention is paid to CVC shares, which had its recommendation reduced to underweight by JPMorgan.