More words, less words, the president of Brazil, Lula Da Silvasaid: “He who bets on the dollar loses”. The phrase he said in an interview with Reuters is similar to that of Lorenzo Sigaut, the Minister of Economy of the Argentine dictatorship, who popularized it in 1981.
Given the devaluation of the real, the Brazilian president attacked those who speculate on the direction of the local currency against the American one.
The truth is that for now the Central Bank cannot contain the price of the dollar and the Brazilian real is depreciating more and more. So far in 2024, the local currency is one of the weakest in the world.
At the end of March, one dollar was worth 4.90 Brazilian reals and today it is worth 5.60, the magazine notes. Fortune.
A detailed report carried out by the Austin Rating agency, based on data from the Central Bank of Brazil (BC), indicated that the real sank 10 percent in the first five months of the year. The Austin report points out that the Brazilian currency rose two positions in a ranking of 118 countries and moved to seventh place among those that depreciated the most in the world.
Lula’s statement about the dollar
Lula declared war on the dollar. In an interview with the news agency ReutersLula said: “Those who bet on derivatives, on the strength of the dollar against the real, will lose money. “Those who go with the dollar should know that they will lose. These days they were saying that the dollar went up because of some statements by Lula and the cretins did not notice that it had already gone up fifteen minutes before.”
“In this perverse world, there are those who believe they can win by betting money on speculative movements in the currency markets. Anyone who speculates will lose money in this country,” he added later at a meeting of the Economic and Social Development Council.
The skyrocketing price of the dollar and the exchange tension led Lula to have to find an enemy: Roberto Campos Neto, Director of the Central Bank appointed by former president Jair Bolsonaro. Lula maintains that the high interest rates maintained by the Central Bank of Brazil prevent economic growth and limit credit. Today, rates stand at 10.5 percent, with inflation around 3.5 percent, Fortuna adds.
What they said from the Central Bank
The president of the Central Bank of Brazil, Roberto Campos Neto, warned this Friday that balance public accounts with an increase in tax revenuesa policy defended by the Government chaired by Luiz Inácio Lula da Silva, may generate more inflation and less growth.
Campos Neto made these statements during a speech on the last day of the Lisbon Forum, which brings together lawyers, academics and politicians from Portugal and Brazil in the Portuguese capital, in which, as he clarified at the beginning, he would not speak about his country but about the global economy.
Although at no time did he directly mention Lula, Campos Neto defended an economic policy that clashes with that of the current Brazilian Government.
“Adjustments made on the income side are generally less efficient and result in more inflation and less growth in emerging markets”he insisted.
In addition, he warned that the fall in the Government’s credibility will cause a rise in interest rates in the markets.
“The government is competing for funds with the private sector. At the same time, with the government’s credibility falling, interest rates end up rising,” said the president of the Brazilian Central Bank.
The Executive, he said, “must always act as a facilitator of private investment, giving value to the free market.”
“Governments and banks must make it clear that markets need to operate more freely,” said the head of Brazil’s banking regulator.
Lula has criticized Campos Neto in several interviews conducted in the last week, in which he also recalled that he has a mandate as head of the Central Bank until December.
“He thinks ideologically like the previous government. I think he is not doing what he should correctly, but he has a mandate and until December he is the president,” he told the radio station O Tempo.
What is happening with Argentina
The devaluation of the real is thus bad news for Argentina. Claudio Caprarulo, from the consulting firm Analytica, said that “inflation and the level of activity in Brazil are higher than expected. This led the Central Bank to not lower the interest rate and increase the depreciation of the real, the latter also influenced by monetary policy in the US,” he said. Clarion.
“In Argentina these conditions have two opposing effects considering that Brazil is one of our main export destinations. A better level of activity boosts our sales while that is at least partially offset by the devaluation of the real. Since December our exchange competitiveness with Brazil has fallen by 50%. In this way, the decision of the Central Bank of Brazil further limits the 2% monthly crawl that our monetary authority decided,” said Caprarulo.
