By The Rio Times | Created at 2025-01-16 22:10:27 | Updated at 2025-01-31 07:12:38
2 weeks ago
The dollar strengthened against the Brazilian real, closing at R$ 6.0533, up 0.47%. This marked a notable shift as the dollar briefly dipped below R$ 6 for the first time in over a month.
The initial decline occurred early in the session. However, the currency regained momentum later due to comments from Scott Bessent, the incoming U.S. Treasury Secretary.
Bessent’s statements during a Senate hearing fueled optimism about the dollar‘s role as a global reserve currency. He indicated that the Trump administration would evaluate import tariffs in three distinct ways, specifically addressing practices in international trade.
His remarks included a focus on tariffs related to steel imports from China. Last December, President-elect Donald Trump criticized Brazil for imposing high tariffs on U.S. goods.
He emphasized reciprocity in trade, stating that if countries like India and Brazil impose significant tariffs, the U.S. would respond similarly. Trump’s administration officially begins on January 20.
Dollar Rises to R$ 6.05 as Trump Administration Hints at Tariff Changes. (Photo Internet reproduction)Domestically, Brazilian markets reacted to President Luiz Inácio Lula da Silva’s sanctioning of tax reform. Finance Minister Fernando Haddad described this reform as a significant economic legacy for the government, despite its immediate effects being unclear.
Additionally, the Economic Activity Index (IBC-Br), which serves as a precursor to Brazil’s GDP, showed a 0.1% increase in November compared to October. This figure surpassed analysts’ expectations of stagnation and positively influenced early trading.
In contrast, the dollar’s performance against other global currencies showed a downward trend due to expectations of further interest rate cuts by the Federal Reserve.
Fed Director Chris Waller suggested that if inflation continues to decline in the U.S., rate reductions could occur sooner. These reductions might be more aggressive than anticipated.
