The devaluation of the Brazilian currency against the dollar is a cause for concern for the Brazilian government, President Luiz Inácio Lula da Silva said on Tuesday, saying he believes the problem is caused by market speculation.
“Obviously I am worried about this rise in the dollar, it is speculation. It is a game of speculative interests against the real,” he said in an interview with Radio Sociedade, in the Brazilian city of Salvador.
“I’ve been talking to people about what we’re going to do (…) I’m going to come back [para Brasília] And on Wednesday I will have a meeting, because what is happening is not normal, it is not normal,” he added.
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Financial market players have attributed the real’s weakness to Lula da Silva’s continued harsh criticism of the high-interest rate policy advocated by the Central Bank, an autonomous institution that maintains its official interest rate at 10.5% despite controlled inflation of around 3.5%.
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Lula da Silva has been pushing, in public statements, for a rate cut to boost credit and economic activity, but the The Central Bank refusesdue to imbalances in public accounts that could put pressure on inflation.
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The Brazilian currency (the real) registers the fifth largest devaluation among other currencies of the world against the dollar since the beginning of the yearaccording to local media calculations.
This Monday, the Brazilian currency depreciated 1.05% against the dollarwhich closed at 5.64 reais, the highest value since December 2021, reinforcing a trend that began months ago but has intensified in recent weeks.
Brazilian Finance Minister Fernando Haddad said on Tuesday that the appreciation of the dollar against the real is due, among other things, to “a lot of noise” and some “communication” problems on the part of the government.
Haddad acknowledged in statements to journalists that the dollar “is rising” and that the The real is one of the currencies that has been most devalued in the world. so far in 2024.
“I attribute it to a lot of noise,” said Haddad, who also said that the government “needs better communicate financial results“which are generally positive, with economic growth of around 2.5% this year, controlled inflation, job creation and attraction of foreign investment.
Without giving details, he said he had received reports that showed an improvement in economic activity and also an increase in tax collection, which is what the government is aiming for. regain balance your bills without having to cut costs.
According to Haddad, this new data will “help adapt” to the current situation and will also contribute to “back” the pressures that exist in the foreign exchange market.
Source: Observadora
