The dollar had little variation against the real this Thursday (12/22), with investors digesting the approval of the Transition PEC in Congress in a session of few catalysts at the international level. At 10:07 am (Brasília time), the spot dollar retreated 0.04%, to 5.2026 reais on sale. On B3, at 10:07 am (Brasília time), the first contract dollar futures contract rose 0.12%, to 5.2105 reais.
The National Congress enacted the Transition PEC on Wednesday night, guaranteeing a victory for President-elect Luiz Inácio Lula da Silva by increasing the spending ceiling next year by 145 billion reais for the payment of Bolsa Família
“In my view, it was a great victory for Lula, as he will start his term with cash on hand. Now, the fear of the market may be around fiscal sustainability”, said Márcio Riauba, manager of StoneX’s operations desk, highlighting that, in addition to spending on Bolsa Família, the PEC also opens a margin of 23 billion reais in next year’s investment accounts.
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The transitional government intended that the PEC could extend the spending ceiling for two years to fund Bolsa Família, but the idea faced resistance in the Chamber, resulting in the approval of the exception to the fiscal rule only for next year.
For Genial Investimentos, “from a political point of view, the reduction in the term means that the future government will have to spend a large part of its political capital on negotiating the new fiscal regime, which needs to be approved by August 2023, which should give great bargaining power to the Legislature in the first year of the future mandate”.
While digesting the consequences of the approval of the PEC, the Brazilian market was also attentive to Lula’s agenda, which should give a statement this Thursday morning, with the expectation of an announcement by several ministers. Already in the afternoon, the future finance minister Fernando Haddad should announce new names of secretaries in his portfolio.
Abroad, the dollar had little change against a basket of six strong pairs, in a session with few catalysts, since one of the major focuses of the market this year, the Federal Reserve, has already held its last monetary policy meeting of 2022.
This Thursday, the latest reading of the Gross Domestic Product (GDP) of the United States for the third quarter will be released, as well as weekly data on unemployment benefits. The day before, the US currency traded on the interbank market closed with a negative variation of 0.03%, at 5.2045 reais on sale.
The Central Bank will hold sales auctions in conjunction with foreign currency purchase auctions, in which it will accept up to 2 billion reais. The authority will also auction up to 18,930 traditional exchange rate swap contracts for the purpose of rolling over the maturity of January 2, 2023.
