BRASILIA. – The price of the dollar in Brazil continues to rise and marked this Friday a new all-time high by exceeding 6.10 reais, driven by uncertainty around the government’s fiscal commitment Luiz Inácio Lula da Silva. Around 10 o’clock, the dollar was trading with an increase of 1.88%, with a value of 6.1016 reais, but then it began to fall before political messages on the controversial tax reform project.
Later, the dollar stopped its rise and began to fall, to 6,015 reais, after the speeches of the presidents of the Senate and the Chamber of Deputies, Rodrigo Pacheco and Arthur Lira, respectively, who reinforced the importance of the adjustment measures presented on Wednesday by the Minister of Economy, Fernando Haddad, although They pointed out a difficult path for the project that exempts from income tax (profits) those who earn up to 5,000 reais (about 840 dollars), the initiative that caused the devaluation.
“The issue of income tax exemption, although it is everyone’s wish, It is not on the agenda for now and can only happen if (and only if) we have the fiscal conditions for it”Pacheco said. Lira added that this project will only be analyzed next year and said that “fiscal responsibility is non-negotiable.”
At noon, it was the Minister of Economy himself, Fernando Haddad, who was more flexible about the project. “I have spoken a lot with the presidents of the House [de Diputados]Arthur Lira, and from the Senate, Rodrigo Pacheco, and there is alignment with the government. If there were any surprises, they were positive, including correcting distortions in the package. We can open the legislative year with corrective measures. “There is no arrogance on the part of the government and no one tries to sell fantasies,” Haddad said at a luncheon for bank directors, promoted by the Brazilian Federation of Banks (Febraban), in Sao Paulo.
On Thursday, the North American currency had already broken the 6 reais threshold for the first time in history. According to the Central Bank of Brazil, the dollar closed the day at 5.99 reais, while this Friday it opened again with a bullish trendreaching 6.0245 reais at 9.15 before continuing to rise.
The Real fell again today against the dollarArchive
For its part, the stock index Ibovespathe main one in Brazil, began the day on Friday with a slight drop of 0.22%standing at 124,340 points.
According to the statistical series of the state Institute of Applied Economic Research (IPEA), Since the real entered circulation in 1994, the US currency had never reached 6 reais.
The devaluation of the real It occurred as a result of the announcement of a package of fiscal adjustment measures by the Brazilian government, which seeks to contain public spending and reassure the markets. However, it was received with skepticism by financial analysts, who consider it insufficient to address fiscal imbalances.
The measurement package includes adjustments in salary ceilings and benefits for public employees, as well as in military retirements, with the objective of generate savings of 70 billion reais (almost 12 billion dollars) until 2026. He also proposes tax the highest income sectorsincluding taxes on large assets, inheritances and high-value financial transactions, and contemplates a tax reduction for middle-income citizens.
The measures “consolidate the government’s commitment to the country’s fiscal sustainability” for “a stronger, fairer and more balanced Brazil in the future,” Finance Minister Fernando Haddad said on national television on Wednesday.
But in parallel with the cuts, Haddad announced that he will favor middle-income citizens with a tax reduction – in the so-called income tax – as a counterpart to alleviate the social impact of the adjustment, which generated doubts among investors.
## Brazilian Real Recovers After Initial Dip , but Uncertainty Lingering
**World Today News Exclusive Interview**
**Brasilia:** The Brazilian real experienced a rollercoaster ride today, hitting a new all-time low against the US dollar before regaining some ground. The initial drop, fueled by anxieties surrounding the government’s fiscal commitment under President Luiz Inácio Lula da Silva, sent shockwaves through the financial markets.
*World Today News* sat down wiht **dr. Ana Paula Silva**, a renowned economist and professor at the University of São Paulo, to dissect the situation and analyze the potential implications for Brazil’s economic future.
**WTN**: Dr. Silva, the Brazilian real plummeted to a record high against the dollar today. What are the primary factors driving this volatility?
**Dr. Silva**: The recent surge in the dollar’s value against the real is multi-faceted. while global economic uncertainty plays a role, the main driver appears to be domestic concerns about the Lula management’s fiscal policies. The proposed tax reform, specifically the exemption on income tax for individuals earning up to 5,000 reais, has sparked meaningful debate and raised concerns among investors about its potential impact on government revenue.
**WTN**: The dollar later backed off its highs after statements from congressional leaders Rodrigo Pacheco and Arthur Lira. What message did they convey, and how did it impact the market?
**Dr.Silva:** Pacheco and Lira essentially reiterated the importance of fiscal obligation while acknowledging the complexities of the tax reform. They emphasized that while the exemption idea is popular, it’s contingent upon ensuring healthy public finances. This message, coupled with their commitment to work towards a balanced approach, seemed to reassure investors, leading to the real’s slight recovery.
**WTN**: This volatility underscores ongoing anxieties about the Brazilian economy. Do you think the government is doing enough to alleviate these anxieties?
**Dr. Silva**: The government faces the difficult task of balancing social welfare with fiscal prudence. While the proposed tax exemption aims to alleviate the burden on lower-income earners, it raises legitimate concerns about its long-term sustainability. The government needs to clearly articulate its fiscal strategy, demonstrating a commitment to responsible spending and revenue generation. Transparency and clear communication will be crucial in restoring investor confidence.
**WTN**: What are the potential implications of this volatility for the Brazilian economy?
**Dr. Silva**: Persistent currency fluctuations can undermine economic stability,impacting everything from inflation and import costs to investment decisions. A weakened real makes imported goods more expensive, potentially fueling inflation. It can also deter foreign investment, hindering economic growth. The government needs to take decisive action to stabilize the currency and create a more predictable economic surroundings.
**WTN**: What message do you have for international investors who are observing these developments?
**Dr. Silva**: Brazil remains a country with immense potential, boasting a diverse economy and abundant natural resources. Though, navigating the current economic uncertainties requires careful analysis and a long-term perspective. investors should closely monitor government policies and economic indicators before making any decisions.
**WTN**: Thank you for your insights, Dr. Silva.
**Dr. Silva**: My pleasure.
