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 Rebounds After Tax Reform Jitters
**World-Today-News.com Exclusive Interview**
**Brasilia** – After hitting a record high of 6.10 reais per dollar earlier today, the Brazilian real rallied back, fueled by assurances from congressional leaders about the government’s commitment to fiscal responsibility. This volatility comes amidst debate surrounding a controversial tax reform proposal that would exempt low-income earners from income tax.
To shed light on thes developments, World-Today-News.com sat down with **Dr. AnaPaula Silva, a leading economist at the Getulio Vargas Foundation**, for an expert analysis.
**WTN:** Dr. Silva, the dollar surged past 6.10 reais earlier today, marking a new all-time high. What are the key factors driving this surge?
**Dr. Silva:** The recent weakness of the Real can be attributed to a confluence of factors. Primarily, it’s driven by uncertainty surrounding the government’s fiscal commitment, exacerbated by the proposed tax reform. Investors are concerned about the potential impact of these changes on Brazil’s already fragile fiscal situation.
**WTN:** The Real subsequently recovered significantly after statements from Senate President Rodrigo Pacheco and Chamber President Arthur Lira. how did their statements impact the market?
**Dr. Silva:** Pacheco and Lira’s statements effectively calmed market jitters. By emphasizing the importance of fiscal responsibility and underscoring the difficult path for the proposed tax reform, they reassured investors that the government remains committed to sound economic policies.
**WTN:** The proposed reform aims to exempt individuals earning up to R$5,000 from income tax. While popular, this measure has sparked concerns about its impact on government revenue. How do you assess this risk?
**Dr. Silva:** This exemption, while socially appealing, poses a serious risk to government revenue and could widen the fiscal deficit. As President Pacheco alluded to, such a measure can only be implemented if the government can secure the necessary fiscal space.
**WTN:** What steps can the government take to address these concerns and restore market confidence?
**Dr. Silva:** The government needs to clearly articulate its fiscal strategy and demonstrate its commitment to fiscal discipline. This means prioritizing spending cuts, increasing revenue through other avenues, and ensuring the sustainability of social programs. Openness and clear communication with the market are crucial in restoring confidence.
**WTN:** Looking ahead, what are your predictions for the Brazilian Real in the near term?
**Dr. Silva:** The Real’s trajectory will depend heavily on the government’s ability to navigate these complex fiscal challenges. If they can convince markets of their commitment to responsible fiscal management, we could see some stabilization or even a strengthening of the currency. However,continued uncertainty and lack of clarity could led to further volatility and depreciation.
**WTN**: Thank you for your insights, Dr. Silva.
**This interview has been edited for clarity and brevity.**
