New York (awp/afp) – The Brazilian real fell on Wednesday to its lowest level in 19 months against the dollar, still winning against emerging currencies, but also against the euro and the pound.
The Brazilian currency fell to 5.5261 reals per dollar, a first since mid-November 2022.
The weakening of the real occurred after the publication of the IPCA price index, which came out at 0.39% over one month in June, less than expected by economists (0.45%) and below the previous figure (0.44%).
This slowdown could influence the Brazilian central bank (BCB), which last week sent a message of firmness and vigilance with regard to inflation.
The BCB, on this occasion, maintained its main key rate, the Selic, putting an end to seven consecutive cuts, which had reduced it from 13.75% to 10.50%.
This decision earned the institution public criticism from President Lula, for whom there is “no explanation for the key rate being so high”.
“Inflation is completely under control,” he said in mid-June.
“You cannot only worry about inflation,” the head of state declared on Wednesday to the online news site UOL, insisting that growth must also be a priority for the BCB.
“President Lula’s political uproar casts a shadow over the credibility of the BCB,” said Andres Abadia of Pantheon Macroeconomics in a note. It thus undermines the institution’s discourse of firmness and deprives the real of support.
Lula has already warned that, to succeed the current governor of the central bank, Roberto Campos Neto, whose mandate comes to an end at the end of the year, he would choose a candidate “who is committed to the development of his country” .
For Adam Button, ForexLive analyst, Brazil is also suffering from the start of a global economic slowdown, which is penalizing major raw material exporting countries.
Furthermore, according to him, in many countries other than Brazil, “inflation has become extremely politically unpopular, even in places where growth has been good.”
As a result, many central banks, the US Federal Reserve (Fed) first and foremost, are deliberately delaying loosening the monetary stranglehold, with Brazil therefore going against the grain. “We are going to fight inflation, at the cost of growth,” he explains.
Cours de mercredi Cours de mardi 20H30 GMT 21H00 GMT EUR/USD 1,0678 1,0714 EUR/JPY 171,69 171,10 EUR/CHF 0,9582 0,9586 EUR/GBP 0,8460 0,8445 USD/JPY 160,79 159,70 USD/CHF 0,8974 0,8947 GBP/USD 1,2621 1,2686
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