Turim’s Insights

The price of the Dollar was one of the topics covered at this month’s webinar in May. Throughout the conversation, our team talked about the main domestic and international factors that help explain the appreciation of the Brazilian Real: in the last two months, the Brazilian currency was the one that rose the most among emerging countries, with an increase of around 12% in the period.

“The main reason is the improvement of the country’s fundamentals”, explained Leonardo Martins Moraes, partner and CIO of Turim MFO. “But not only that. With low interest rates, it was very intuitive for investors to hedge currency. Now, with the prospect of even higher Selic rates, this movement decreases and we have a dismantling of these positions, which ends up generating a relevant flow of USD sales”.

In addition, Leonardo also pointed out that, after the capital outflow at the beginning of the year, we have returned to a positive foreign flow return. Together, all these factors increase the pressure to short Dollar and strengthen the Real.