Faria Lima makes a big mistake: Real leads global appreciation against the dollar

247 – The Brazilian real recorded the best performance among the world’s major currencies against the dollar this Wednesday (5), appreciating by 2.72%. This movement reinforces that the supposed “fears” regarding the generation of formal jobs in Brazil in January and the ministerial reform of Lula’s government were, at the very least, exaggerated — and, at most, a strategy of financial terrorism.

Moreover, the central government achieved a primary surplus of R$ 84.882 billion in January, the highest in the National Treasury’s historical series, which began in 1997. The result demonstrates that financial market concerns about the country’s fiscal trajectory were unfounded.

In a shortened session, which started only in the second half of Ash Wednesday, the spot dollar closed at R$ 5.7558, down 16 cents from Friday’s closing.

The weakening of the U.S. currency was also driven by signs of an economic slowdown in the United States, reflecting uncertainty about the impacts of trade tariffs imposed by the government. Investors began pricing in the possibility of an economic contraction in the country, with traders on the Kalshi prediction market estimating a 42% probability of a U.S. recession this year, according to Reuters.

Between October and early January, the dollar had risen almost 10% against a basket of major currencies, driven by the resilience of U.S. economic data and expectations that the Federal Reserve (Fed) would make only one or two interest rate cuts in 2025. However, since then, the U.S. currency has declined by about 5%, with most of the losses occurring in recent weeks, reflecting signs of economic weakness and the expectation that the Fed could implement up to three interest rate cuts by the end of the year.

(With information from Reuters).